If Goods X and Y Are Substitutes in Production,then a Rise

question 174

Multiple Choice

If goods X and Y are substitutes in production,then a rise in the price of good X

• A)increases the demand for good Y.
• B)decreases the demand for good Y.
• C)increases the supply of good Y.
• D)decreases the supply of good Y.
• E)might change the supply of Y;it depends on whether X and Y are also substitutes.

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Definitions:

Crowding Out

The phenomenon where increased government spending leads to a reduction in private sector investment or spending due to higher interest rates or competition for resources.

Discretionary Fiscal Policy

It involves government policy changes in taxation and spending designed to influence economic activity, typically to counteract inflation or deflation and stabilize the economy.

Nominal Output

The total value of goods and services produced by an economy, measured in current prices without adjusting for inflation.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed.