The Effect of an Increase in Consumer Income on Equilibrium

question 32

Multiple Choice

The effect of an increase in consumer income on equilibrium price and quantity of Florida orange juice (a normal good) is

• A)to increase equilibrium price and quantity
• B)to decrease equilibrium price and quantity
• C)to increase equilibrium price and decrease equilibrium quantity
• D)to increase equilibrium quantity and decrease equilibrium price
• E)that equilibrium price and quantity remain constant

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Definitions:

International Monetary Fund (IMF)

An organization of over 150 nations set up as a lender of last resort, especially to nations that had otherwise been planning to devaluate their currency, or were in financial crisis.

World Bank

An international banking entity that delivers financial support in the form of loans and grants to less affluent countries, aiming to assist them in implementing capital projects.

Low-interest Loans

Loans offered with a lower than average interest rate, typically provided to encourage borrowing or stimulate economic activity.

Exports

Commodities or services developed in one country and exported to buyers in another country.