For a Renter, the Income Effect of an Increase in Apartment

question 54

Multiple Choice

For a renter, the income effect of an increase in apartment rents will

• A)have a greater effect than the income effect of an increase in the price of chewing gum
• B)have no impact on the demand curve for apartments, because everything except price is assumed constant
• C)have less of an effect than the income effect of an increase in the price of chewing gum
• D)be almost negligible, because housing is a necessity
• E)occur only when income increases

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Definitions:

Market-based Economy

An economic system where prices and the distribution of goods are determined by supply and demand in a free market.

Mercantilism

An economic theory prevalent in the 16th to 18th centuries focusing on maximizing a nation's exports and minimizing imports to accumulate wealth and precious metals.

Communism

A political and economic ideology advocating for a classless society in which all property and resources are communally owned and controlled by the public or the state.

Gross Domestic Product

The total value of all goods and services produced over a specific time period within a country's borders.