In the Model Where G = Qt, When Q Increases

question 14

Multiple Choice

In the model where G = qt, when q increases, the substitution effect

• A) reduces C and increases G.
• B) reduces both C and G.
• C) decreases G and increases C.
• D) increases both C and G.
• E) increases C and decreases G.

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Definitions:

Impossibility Theorem

A principle, also known as Arrow's impossibility theorem, stating that it is impossible to devise a social welfare function that fairly ranks societal preferences in the presence of three or more options.

Voting Scheme

A method or system used for casting votes and determining the outcome in an election or decision-making process.

Individual Preferences

The specific likes, dislikes, desires, and needs that dictate the choices made by an individual, often influencing economic decisions and behaviors.

Majority Rule

A decision rule that selects alternatives which have a majority, that is, more than half the votes.