Use the Information Below to Answer the Following Questions

question 108

Multiple Choice

Use the information below to answer the following questions.
Fact 9.3.2 Hamptons Glamour Finds a Humbler Home
Lucy Martin collected and sold vintage clothing in the wealthy Hamptons,but in the recession of 2008,her sales fell.She eventually moved her shop to Tannersville,N.Y. ,where her expenses are 70 percent less than they were in the Hamptons.
Source: The New York Times,December 22,2016
-Refer to Fact 9.3.2.If the price of vintage clothing falls and income remains the same,the substitution effect ________ the quantity of used clothing bought and the income effect ________ the quantity of used clothing bought.

• A)increases;decreases
• B)increases;increases
• C)decreases;increases
• D)decreases;decreases
• E)does not change;increases

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Definitions:

Interest Rate

The percentage at which interest is charged or paid on a sum of money, often expressed annually.

Cash Flows

Cash flows refer to the net amount of cash and cash-equivalents being transferred into and out of a business.

Quarterly Savings

Savings accumulated or set aside at the end of every quarter of the fiscal year.

Rate Of Return

Financial advancement or recession in the value of an investment over a prescribed time frame, stated as a percentage of the initiating investment.