Exhibit 3-6 Refer to Exhibit 3-6. If an Increase in the Price

question 23

Multiple Choice

Exhibit 3-6
Refer to Exhibit 3-6. If an increase in the price of good Y causes the demand for good X to shift from D₁ to D₂, goods X and Y are

• A)normal goods.
• B)inferior goods.
• C)substitutes.
• D)complements.
• E)neutral goods.

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Definitions:

Present Value

The present worth of a sum of money or series of cash flows anticipated in the future, calculated using a certain rate of return.

Consumption Plan

An outline of how individuals or households intend to allocate their income towards consumption goods and services over a period.

Interest Rate

The cost of borrowing money or the reward for saving it, typically expressed as a percentage of the principal amount per year.

Interest Rate

The cost of borrowing money or the return for lending money, typically expressed as a percentage.