In General, a Change in the Price of a Good

question 39

Multiple Choice

In general, a change in the price of a good:

• A)causes a substitution effect only.
• B)causes an income effect only.
• C)causes both an income and substitution effect.
• D)has no effect on the budget constraint.

---

Definitions:

Economic Growth

A rise in the economic power to produce goods and services when comparing distinct periods.

Capital Formation

The process of accumulating assets and investments that are used for future production or economic growth.

World Bank

An international monetary organization granting loans and finances to governments of less affluent countries for capital project undertakings.

Developing Nations

Countries with lower levels of industrialization, lower standards of living, and lower Human Development Index (HDI) scores compared to more developed countries.