Which of the Following Is an Example of a Positive

question 69

Multiple Choice

Which of the following is an example of a positive economic statement?

• A) The government should ideally work as a welfare state.
• B) An increase in income causes an increase in savings.
• C) Economics is the most useful social science.
• D) Eliminating poverty is more important than reducing inflation.

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Definitions:

Normal Good

A type of good for which demand increases as the income of the consumer increases, holding all else constant.

Wealth Effect

The change in spending and consumption patterns by individuals or households due to changes in their real or perceived wealth.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive goods towards cheaper ones.

Income Effect

The impact on consumer's choice arising from a change in their income, influencing their purchasing power.