If the Price of a Normal Good Rises,the Income Effect

question 112

Multiple Choice

If the price of a normal good rises,the income effect

• A)will increase consumption of the good and the substitution effect will decrease consumption.
• B)will decrease consumption of the good and the substitution effect will increase consumption.
• C)and the substitution effect will both increase consumption of the good.
• D)and the substitution effect will both decrease consumption of the good.
• E)is always larger than the substitution effect.

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Definitions:

Year End

The end of a fiscal year or accounting period, at which time companies close books and prepare financial statements.

Exchange Loss

A financial loss resulting from foreign exchange rate fluctuations when converting foreign currency transactions into the domestic currency.

Transaction Date

The date on which a transaction actually takes place, often used in the context of financial trades or agreements.

Other Comprehensive Income

Revenues, expenses, gains, and losses that are not included in net income, but instead are recorded directly to shareholders' equity.