When a Price Changes There Are Two Effects: The

question 16

Multiple Choice

When a price changes there are two effects: the:

• A) real-income effect and the consumer optimum effect.
• B) substitution effect and the marginal utility effect.
• C) real-income effect and the substitution effect.
• D) marginal utility effect and the substitution effect.
• E) consumer optimum effect and the substitution effect.

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Definitions:

Creeping Inflation

A situation in which the inflation rate is low and increases slowly over a period of time.

World War I

A global conflict that lasted from 1914 to 1918, involving many of the world's great powers, marked by military stalemates and massive casualties.

Economic Concern

Issues or situations that affect the well-being of an economy, such as inflation, unemployment, and economic growth.

Double-Digit Inflation

An inflation rate that reaches or exceeds 10%, indicating rapid increases in prices.