For Most Goods, the Real-Income Effect of a Price Change

question 272

Multiple Choice

For most goods, the real-income effect of a price change is

• A) small because the good accounts for a small part of the consumer's budget.
• B) small because the decision to buy a good depends only on the income of a consumer.
• C) large because the price of the good is in terms of the currency and the income of the person is also in terms of the currency.
• D) zero because the real-income effect only applies to durable goods.

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Definitions:

Misinformation Effect

The phenomenon that occurs when a person's recall of episodic memories becomes less accurate because of post-event information.

Spacing Effect

The phenomenon that information is better retained when study sessions are spaced out over time rather than crammed in a short period.

Source Amnesia

A memory disorder where an individual can remember certain information but is unable to recall how, when, or where they learned it.

Hypnotic Suggestion

A technique used in hypnosis where a suggestion is made to the individual to trigger a change in perception, cognition, or behavior.