Which of the Following Statements About the Real-Income Effect and the Substitution

question 41

Multiple Choice

Which of the following statements about the real-income effect and the substitution effect is true?

• A) The real-income effect always exists,but the substitution effect does not always exist.
• B) The real-income effect and the substitution effect always exist.
• C) The real-income effect does not always exist,but the substitution effect always exists.
• D) The real-income effect and the substitution effect cannot occur at the same time.
• E) The real-income effect and the substitution effect occur only with an increase in price.

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Definitions:

Positive Emotion

Feelings or emotions that are pleasurable or satisfying such as joy, gratitude, serenity, interest, hope, pride, amusement, inspiration, awe, and love.

Positive Mood

A state of mind or feeling characterized by contentment, happiness, or optimism.

Plodding and Repetitive

Describing tasks or activities that are slow, laborious, and lacking in variety, often leading to boredom or monotony.

Quick and Varied

Describes actions or processes that happen rapidly and involve a wide range of different elements or aspects.