Assume Sally Is Initially in Equilibrium and That X and Y

question 267

Multiple Choice

Assume Sally is initially in equilibrium and that X and Y are normal goods for her. Then the price of X rises. For Sally to move to a new equilibrium point, her consumption of

• A) X must remain constant, but her consumption of Y must increase.
• B) X must decrease.
• C) X must increase.
• D) both X and Y must increase.

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Definitions:

Gross Earnings

The total amount of money earned by an individual or a company before any deductions or taxes are applied.

Taxable Income

The amount of an individual's or a corporation's income used to determine how much tax is owed to the government.

Withholding Allowance

A tax term referring to an exemption that reduces how much income tax an employer deducts from an employee's paycheck.

Monthly Salary

Regular payment from an employer to an employee, typically provided once a month, for the services rendered by the employee.