Consider a Two Good World, with Commodities X and Y

question 59

Multiple Choice

Consider a two good world, with commodities X and Y.If Y is an inferior good, then an increase in consumer income cannot

• A)decrease the demand for Y.
• B)decrease the demand for X.
• C)increase the demand for X.
• D)make the consumer better off.

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Definitions:

Index Fund

A type of mutual fund or exchange-traded fund (ETF) designed to follow the returns of a specific market index.

Treasury Bills

Short-term government securities with maturity periods of one year or less, sold at a discount from their face value.

Rate of Return

The percentage of profit or loss on an investment over a specific period, expressing the gain or loss relative to the investment's initial cost.

Small-firm Stocks

Equity securities of companies with a smaller market capitalization, often characterized by higher volatility and potential for growth compared to larger companies.