Assume You Are Consuming Two Goods,X and Y

question 42

Multiple Choice

Assume you are consuming two goods,X and Y.Suppose that the money prices for X and Y remain unchanged,but your income increases by 20%.What happens to your consumption of good X?

• A)it stays the same
• B)it increases
• C)it increases or decreases,depending on whether it is normal or inferior
• D)it increases by 20%
• E)it decreases

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, a critical component in lease accounting.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing assets, liabilities, and shareholder equity.

Liability

A financial obligation or debt owed by a company to others, often categorized as current or long-term.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, serving as an estimate for lease accounting when the implicit rate in the lease is unclear.