If the price of lattes, a normal good you enjoy, falls, then
A) the income effect which causes you to increase your latte consumption outweighs the substitution effect which causes you to reduce your latte consumption, resulting in more lattes purchased.
B) the income and substitution effects offset each other but the price effect leads you to buy more lattes.
C) both the income and substitution effects lead you to buy more lattes.
D) the substitution effect which causes you to increase your latte consumption outweighs the income effect which causes you to reduce your latte consumption, resulting in more lattes purchased.
C
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Refer to Figure 24-2. Ceteris paribus, an increase in the expected future price level would be represented by a movement from
A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.
If children can be considered durable goods, then this would help explain
(a) high birth rates among farm families. (b) small family size among farm families. (c) lower birth rates in towns than in the countryside. (d) lower birth rates in the countryside than in towns.