Which of the following is a difference between the income effect and the substitution effect?
a. The income effect refers to the way a change in income alters the buying power of an individual, while the substitution effect occurs when a good becomes cheaper and people seek alternatives.
b. The income effect refers to the way a change in price alters the buying power of an individual, while the substitution effect occurs when a good becomes expensive and people seek alternatives.
c. The income effect refers to the way a change in price alters the buying power of an individual, while the substitution effect occurs when the opportunity cost of a good increases and people seek alternatives.
d. The income effect occurs when a good becomes expensive and people seek alternatives, while the substitution effect refers to the way a change in income alters the buying power of an individual.
b
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When the price of a good rises, the resulting change in quantity demanded due solely to the decline in your income's purchasing power is called the
a. Giffen-good phenomenon. b. law of demand. c. substitution effect. d. income effect.
If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are
A) substitutes. B) normal goods. C) inferior goods. D) inelastic goods. E) complements.
In a given year, a country's GDP = $9841, net factor payments from abroad = $889, taxes = $869, transfers received from the government = $296, interest payments on the government's debt = $103, consumption = $8148, and government purchases = $185. The country had government saving equal to
A. $3850. B. $2112. C. $285. D. $2397.
Which one of the following is not considered a financial intermediary?
A) a pension fund B) an insurance company C) a credit counselor D) a bank