When the price of an inferior good decreases,
a. both the income and substitution effects encourage the consumer to purchase more of the good.
b. both the income and substitution effects encourage the consumer to purchase less of the good.
c. the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good.
d. the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.
d
You might also like to view...
Every six weeks, the Federal Open Market Committee (FOMC) meets to discuss monetary policy. This discussion is mainly focused on ________
A) information of the equilibrium real interest rate from the past three years B) the current month's release of the CPI by the BLS C) the three year projections of the equilibrium real interest rate D) the past 18 month history and future 18 month projections of the discount rate E) none of the above
If a Japanese pension fund decides to purchase U.S. government bonds, what is the effect in the exchange market? a. It will increase the supply of U.S. dollars
b. It will decrease the supply of U.S. dollars. c. It will increase the demand for U.S. dollars. d. It will decrease the demand for U.S. dollars.
Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is
A. -$20 billion. B. -$10 billion. C. $70 billion. D. $140 billion.
If real GDP grows at a rate of 6 percent and population grows at a rate of 2 percent, then real GDP per person grows at a rate of
A) -3 percent. B) 8 percent. C) 2 percent. D) 4 percent. E) 0.5 percent.