Suppose the Price of a Good Rises

question 38

Multiple Choice

Suppose the price of a good rises.When will the resulting substitution effect reduce the quantity demanded of the good?

• A) Always.
• B) Whenever the good is a non-Giffen good.
• C) Only when the good is normal.
• D) Only when the good is inferior.

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Definitions:

Instability

A situation characterized by a lack of stability, predictability, or consistency, often leading to chaos or disorder in social, economic, or political contexts.

Truman Doctrine

A U.S. foreign policy established in 1947, asserting that the U.S. would provide economic and military aid to countries threatened by communism, marking the start of the Cold War era containment strategy.

Mr. X Article

The Mr. X Article, also known as "The Sources of Soviet Conduct," was an influential 1947 essay written by George F. Kennan under the pseudonym "Mr. X," outlining the strategy of containment of Soviet expansion.

Containment Doctrine

A foreign policy strategy aimed at preventing the spread of communism by providing economic and military aid to countries threatened by Soviet expansion.