Which of the Following Is an Example of the Income

question 92

Multiple Choice

Which of the following is an example of the income effect during a period of inflation?

• A) You buy lots of peanut butter,which decreases in price while the price level rises
• B) You own stock that increases in value more rapidly than the price level does
• C) You own a house,and its value rises at the same rate as the price level does
• D) Your income is fixed and does not increase even though the price level is rising

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Definitions:

Displacement

A psychological defense mechanism in which a person redirects an emotional response from the rightful recipient to another, less threatening source.

Rehearsal

A cognitive process involving the repetition of information to be remembered, enhancing memory retention.

Elaborative Rehearsal

A memory strategy that involves relating new information to something that is already known.

Short-term Memory

A cognitive function where a limited amount of information is held temporarily for use in ongoing tasks.