Each country in NAFTA sets its own tariffs to the rest of the world.

In an effort to discover whether or not workers understand inflation, economist Robert Shiller conducted a survey. When asked about the effect of general inflation on their wages or salary, the most popular response coming from workers was,

A) "My wages usually catch up to rising prices within a year." B) "My wages have always increased by more than the rate of inflation." C) "The price increase will create extra profit for my employer.... There will be no affect on my pay." D) None of the above is correct.

Which of the following would cause a consumer to purchase less of a good when the price of the good rises?

a. The income effect b. The substitution effect c. Both a and b d. Neither a nor b