In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. If X is an inferior good, a decrease in income will:
A. increase S, decrease P, and increase Q.
B. decrease D, decrease P, and increase Q.
C. decrease D, decrease P, and decrease Q.
D. increase D, increase P, and increase Q.
Answer: D
You might also like to view...
Which of the following is NOT a result of a permanent fall in foreign demand on one country's exports under floating exchange rate?
A) The DD curve shifts to the left due to reduction of aggregate demand. B) The AA curve shifts upwards due to the increased expected long-run exchange rate. C) a reduction in output by a smaller degree compared to temporary fall in demand D) depreciation in home country's currency E) a raised level of unemployment
As long as the amount of food stamps an individual receives is less than they would have spent on food without the food stamps, the food stamps act like a straight income transfer
a. True b. False