The Income Effect Is the

question 27

Multiple Choice

The income effect is the

• A) change in demand that results from an attempt to substitute a good whose price has decreased for another good whose price remained constant after having nullified the implicit change in income
• B) good for which demand decreases as the income of the consumer increases and the relative prices remain constant
• C) impact of an income-induced change in demand caused by a change in price

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Definitions:

Cash Prize

A monetary award given to a winner or recipient in contests, competitions, or lotteries.

Compounded Annually

the process of adding interest to the principal sum of a loan or deposit once every year.

RRSP

A Retirement Savings Plan officially recognized for both working individuals and self-employed people in Canada, designed for saving and investing towards retirement.

Annual Contributions

Regular amounts added to an investment, savings account, or retirement fund once every year.