Exhibit 3-6 Refer to Exhibit 3-6. If an Increase in Income Causes

question 8

Multiple Choice

Exhibit 3-6
Refer to Exhibit 3-6. If an increase in income causes the demand for good X to shift from D₁ to D₂,then good X is

• A)a normal good.
• B)an inferior good.
• C)a substitute good.
• D)a complementary good.
• E)a neutral good.

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Definitions:

Full Employment

An economic scenario where every available workforce is employed in the most financially efficient method.

Classical Theory

in economics, refers to a school of thought that emphasizes free markets, the role of competition, and the minimal intervention of government in the economy, foundational to later economic theories.

Wages And Prices

The relationship and dynamics between the compensation paid to labor and the cost of goods and services in an economy.

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible, typically reflected by the absence of cyclical unemployment.