If There Are Two Goods and If Income Doubles and the Price

question 73

Multiple Choice

If there are two goods and if income doubles and the price of good 1 doubles while the price of good 2 stays constant, a consumer's demand for good

• A)1 will increase only if it is a Giffen good for her.
• B)2 will decrease only if it is a Giffen good for her.
• C)2 will increase only if it is an inferior good for her.
• D)2 will decrease only if it is an inferior good for her.
• E)None of the above.

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Definitions:

Welfare State

A social system in which the government takes responsibility for the well-being of its citizens by providing services such as healthcare, education, and financial assistance.

Consensus

Consensus is the general agreement reached by a group as a whole, often used in the context of decision-making processes where unity and collective support are sought.

Bretton Woods

Refers to the international monetary system established in 1944 in Bretton Woods, New Hampshire, which set up rules for commercial and financial relations among the world's major industrial states.

International Monetary Fund

The International Monetary Fund (IMF) is an international organization that aims to promote global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.