Figure 10-2 ​

question 127

Multiple Choice

Figure 10-2
​
-In Figure 10-2, which segment of the aggregate supply curve has the smallest multiplier effect?

• A)AB
• B)BC
• C)CD
• D)DG

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Definitions:

Normal Good

A good for which demand increases when income increases, and falls when income decreases but price remains constant, showing a direct relationship between income and demand.

Income Elasticity

A measure of how much the demand for a good or service changes in response to a change in consumers' income levels.

Normal Good

A good for which demand increases as consumer income rises, and decreases as consumer income falls.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, as opposed to a normal good where demand increases with income.