When the Income Effect Moves in the Same Direction as the _______

question 137

Multiple Choice

When the income effect moves in the same direction as the _______ effect, a greater income effect contributes to a _______ price elasticity of demand.

• A) substitution; greater
• B) substitution; smaller
• C) demand; greater
• D) budget; smaller

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Definitions:

Dependent

An individual, such as a child or relative, whose support and financial care are provided by the taxpayer, and is eligible for certain tax benefits.

Lifetime Learning Credits

A tax credit available in the United States to offset higher education expenses, applicable to an unlimited number of tax years.

American Opportunity Tax

A credit offered to first four years of higher education expenses, providing a tax break to defray the costs of tuition and related expenses.

Education Expenses

Costs associated with education, such as tuition fees, textbooks, and other school-related expenses, which may be eligible for tax deductions or credits.