Which of the following statements about the income effect of a price change is NOT true?
A. It affects consumption by removing compensation.
B. It always involves a parallel shift in the budget line.
C. It isolates the influence of a change in relative prices.
D. It reflects the fact that a price change affects a consumer's purchasing power.
C. It isolates the influence of a change in relative prices.
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Suppose Spam is an inferior good. If the U.S. economy hit bad times, and demanders' incomes were to fall, which of the following would tend to occur?
A) Spam sales would increase. B) Spam demand would decrease. C) The price of Spam would increase. D) Both A and C above. E) Both B and C above.
Compute the elasticity of demand for the demand curve p = 15Q-0.7. Does the elasticity vary with the price?
What will be an ideal response?
According to data on GDP growth between 1980 and 2009, which of the following statements is true?
What will be an ideal response?
A CPI that equals 1.34 in 2016 (when 2010 is the base year) means that:
A. prices in 2016 are 34 percent higher than in 2015. B. the average level of prices is 34 percent higher in 2016 than in the base year. C. the CPI equals $1.34 in 2016. D. the inflation rate in 2016 is 134 percent.