Suppose That a Country Is Exporting Good X and Importing

question 1

Multiple Choice

Suppose that a country is exporting good X and importing good Y. Suppose also that, in a particular range of the country's offer curve, a rise in the relative price of X causes the country to export less of X and to import more of Y. Then, in this range,

• A) with respect to good Y, the "income effect" of a rise in the terms of trade outweighs The "substitution effect" and the "production effect."
• B) with respect to good X, the "substitution effect" of a rise in the terms of trade Outweighs the "income effect" and the "production effect."
• C) with respect to good X, the "production effect" of a rise in the terms of trade Outweighs the "substitution effect" and the "income effect."
• D) with respect to good X, the "income effect" of a rise in the terms of trade outweighs The "substitution effect" and the "production effect."

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A field of economics that studies the effects of psychological, social, cognitive, and emotional factors on economic decisions.