A Result of a Fall in the Price of Gasoline

question 232

Multiple Choice

A result of a fall in the price of gasoline, consumers buy more gasoline and take more driving vacations.This situation is an illustration of:

• A)the income effect.
• B)the substitution effect.
• C)diminishing marginal utility.
• D)the demand for inferior goods.

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Definitions:

Bretton Woods Agreement

An agreement established in 1944 which set up an international monetary system based on fixed exchange rates and established the International Monetary Fund (IMF) and the World Bank.

Net Indebtedness

The total amount of borrowed money minus assets or reserves, indicating a person's, company's, or country's financial obligations.

Factor Payments

Payments made to the factors of production, such as wages to labor, rent to landowners, interest to capital, and profits to entrepreneurs.

International Currency Markets

Global platforms for exchanging one country's currency for another's, influencing foreign exchange rates and international trade.