A fall in the price of a good increases the real income or purchasing power of consumers so that they are able to buy more of the product. This statement best describes:
A) the income effect.
B) a complementary good.
C) the substitution effect.
D) an inferior good.
Ans: A) the income effect.
Economics
You might also like to view...
If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded
A) there is a shortage of labor. B) the real wage rate will rise to restore equilibrium. C) the real wage rate is greater than the equilibrium real wage rate. D) None of the above answers is correct.
Economics
What happens to the price of bonds when the Fed is selling bonds? What happens to the interest rate? What happens to the money supply?
What will be an ideal response?
Economics