If There Is an Increase in Income, Which of the Following

question 368

Multiple Choice

If there is an increase in income, which of the following is true?

• A) The demand for complementary goods decreases.
• B) The demand for substitute goods decreases.
• C) The demand for normal goods decreases.
• D) The demand for normal goods increases.
• E) The supply for all goods decreases.

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Definitions:

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.).

Free Trade

An economic policy that allows imports and exports between countries with minimal or no tariffs, quotas, or other restrictions.

World Price

The worldwide cost of a product or service, set by the conditions of international supply and demand.

Domestic Price

The price of goods or services within a particular country, unaffected by international market variables.