The Income Effect Refers to the Impact of a Change

question 32

Multiple Choice

The income effect refers to the impact of a change in:

• A)money income of consumers on the price of a good.
• B)the relative price of a good on the demand for other goods.
• C)the price of a good on a consumer's real income.
• D)the price of a substitute good on a consumer's budget.
• E)money income of consumers on the demand for a good.

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Definitions:

Forward Contracts

A non-standardized agreement between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Financial Futures

Standardized contracts to buy or sell financial instruments or physical commodities for future delivery at an agreed price.

S&P 500 Index

An index tracking the performance of 500 major US companies listed on the stock exchanges.

New York Stock Exchange Index

An indicator that shows the performance of all stocks listed on the New York Stock Exchange.