Which of the Following Statements About a Giffen Good Is

question 29

Multiple Choice

Which of the following statements about a Giffen good is FALSE?

• A) It is very rare.
• B) Its demand curve slopes upward.
• C) The consumer buys a lot of an inferior good, and consumption of the good is very responsive to changes in income.
• D) The substitution effect dominates the income effect.

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Definitions:

Bank Discount Quote

A method of quoting the price of a short-term money market instrument, like a Treasury bill, as a discount from its face value, not taking into account compound interest.

Face Value

The nominal or dollar value printed on a bond or other financial instrument, representing the amount to be repaid at maturity.

Municipal Bond

A debt security issued by a state, municipality, or county to finance its capital expenditures.

Corporate Bond

A debt security issued by a corporation to raise capital, whereby the issuer promises to repay the principal along with interest at specified dates.