In general, a change in the price of a good:
A. causes a substitution effect only.
B. causes an income effect only.
C. causes both an income and substitution effect.
D. usually has no effect.
C. causes both an income and substitution effect.
You might also like to view...
The capital gains tax cut enacted in 2003 will hinder capital formation
a. True b. False Indicate whether the statement is true or false
The gold in Fort Knox backs all U.S. currency
Indicate whether the statement is true or false
Required reserves:
A. Must be held at the regional Fed bank. B. Represent the dollars that a bank can lend. C. Are the minimum amount of reserves a bank is required to hold. D. Are equal to total reserves minus expected reserves
Which of the following equations represents investment spending in a closed economy?
a. I = Y + C – G b. I = Y – C – G c. I = Y – C + G d. I = Y/ (C – G)