According to the Substitution Effect, an Increase in the Price

question 31

Multiple Choice

According to the substitution effect, an increase in the price of oranges will:

• A)​cause consumers to consume fewer apples because more money is spent on oranges.
• B)​cause consumers to spend more on oranges because a higher price signals that oranges are better than apples.
• C)​cause consumers to replace some oranges with other fruit that is now relatively cheaper than oranges.
• D)​leave consumers with less money to spend on all goods.

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Definitions:

Government Expenditures

The total amount spent by the government, including spending on goods, services, and public works, and transfer payments.

GDP Components

The parts that make up Gross Domestic Product, generally categorized as consumption, investment, government spending, and net exports.

GDP

Gross Domestic Product, the total monetary value of all final goods and services produced within a country's borders in a specific time period.

American Tourists

Individuals from the United States who travel to different countries or destinations for pleasure, leisure, or cultural experiences.