Which Statement Is True for an Inferior Good

question 82

Multiple Choice

Which statement is true for an inferior good?

• A)The substitution effect is positive;as price rises,consumption increases.
• B)The income effect is absent;as income increases,consumption remains constant.
• C)The income effect works in the opposite direction to the substitution effect.
• D)The good is of poor workmanship.
• E)The income effect works in the same direction as the substitution effect.

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Definitions:

OID

Original Issue Discount, the difference between the original issue price of a bond and its par value, which is treated as interest by the IRS.

Computed

Refers to the result obtained after performing a mathematical calculation or processing data using a computer.

Taxpayer Report

An official document or filing that a taxpayer submits to the tax authorities detailing income, expenses, and other relevant tax information.

Interest Income

Earnings on various types of investments that pay interest, such as savings accounts, CDs, and bonds.