Bart consumes food and clothing, which are both normal goods. Suppose that the price of food falls. The substitution effect of this price decrease is ________ and the income effect of this price decrease is ________
A) that Bart buys more clothing and less food; that Bart buys more of both food and clothing
B) reflected by a change in the relative prices of food and clothing; is represented by a movement along the original indifference curve
C) reflected by a parallel shift outward of the budget line; that Bart earns more money each month
D) reflected by the change in the slope of the budget line; that Bart has greater purchasing power
D
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What is the shape of average cost curve? Provide the reason for that particular shape.
What will be an ideal response?
"If Congress cuts income taxes, demand for output is likely to increase" is a ________ statement about ________ policy.
A. positive; monetary B. normative; fiscal C. normative; monetary D. positive; fiscal
If a price ceiling is set below the equilibrium price in a market
A. surpluses of the commodity will develop. B. rationing will be unnecessary. C. the quantity supplied will exceed the quantity demanded. D. the quantity demanded will exceed the quantity supplied.
In the traditional Keynesian model, an increase in taxes leads to all of the following EXCEPT
A. an increase price level. B. a decrease in consumption. C. a decrease in aggregate demand. D. lower real GDP.