Which of the Following Increases the Demand for a Good

question 135

Multiple Choice

Which of the following increases the demand for a good or service?

• A) a fall in the price of the good or service
• B) a smaller number of consumers wanting to buy the good or service
• C) a rise in the price of the good or service
• D) a rise in the price of a substitute good or service
• E) a rise in the price of a complement

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Definitions:

Induced Consumption

Refers to the portion of consumer spending that increases or decreases in response to changes in income.

Disposable Income

The pot of funds households have at their disposal for saving and spending, post-income tax.

MPC

refers to the Marginal Propensity to Consume, which is the fraction of additional income that a household spends on consumption.

Disposable Income

The cash flow available to households for the purposes of spending and saving after income taxes.