When the Price of a Good Falls, the Income Effect

question 458

Multiple Choice

When the price of a good falls, the income effect for a normal good implies that people buy

• A) less of that good because the relative price of the good has fallen.
• B) more of that good because the relative price of the good has risen.
• C) less of that good because they cannot afford to buy all the things they previously bought.
• D) more of that good because they can afford to buy more of all the things they previously bought.

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Definitions:

Abolitionist Petitions

Written appeals made by individuals or groups demanding the end of slavery, often presented to legislative bodies.

Slave Trade

The historical trade of enslaved people, particularly across the Atlantic Ocean from Africa to the Americas, that peaked in the 17th to 19th centuries, involving millions of Africans being forcibly transported and sold.

Independent Treasury Bill

Legislation passed in 1840 and later in 1846 establishing a system where the U.S. government managed its own funds independently of private banks, storing money in Treasury buildings.

Economic Crisis

A situation characterized by a significant decline in the economy of a country or globally, leading to a decrease in consumer wealth, business failures, and increased unemployment.