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Explain the subsititution and income effect of decrease in price?
Wiki User
∙ 15y ago
substitution effect is the explanation for the downward slope of the aggregate damnd curve.
Wiki User
∙ 15y ago
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Would you explain residual income guidelines for FHA loans?
FHA doesn't have residual income guidelines...this applies to VA loans
The law of demand results from which two patterns of behavior?
substitution effect and income effect :) 100% accurate
What effect can limited income have of members of a family?
I Don't Know :L
Is Rent received on a two-bedroom apartment considered to be GDP?
Any increase or decrease inÊa persons income is included on the GDP. The rent on a two-bedroom apartment is an increase in income and would be included.
Will cosigning a loan effect your ability to get a loan?
Yes, it will affect your debt to income ratio.
What terms is defined as increase or decrease in purchasing power brought on by changing in price?
income effect
What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
What is the effect of an increase in consumer income on demand for a good?
They both will increase (or decrease).
What is the effect on income when service is rendered on credit?
Income from services rendered account will decrease and debtors account will increase
Does disposable income decrease when income decreases?
yes because the disposable income it is necessary to determine total income so when income decrease does disposable income decrease also.
The individual demand curve is downward slopping use income and substitution effect to explain?
help me with the answer
Why an exogeneously motivated decrease in exports may impact adversely on the national income?
Since exports increase a country's national income, and are determined by a number of variables, therefore an exogeneously motivated decrease (determined outside domestic control) will obviously have an adverse effect on national income.
What would happen to net income and cash flow if depreciation was increased by 1 million?
Net income would decrease by 1,000,000 - would have no effect on cash flow.
How can capital durability eventually decrease the level of investment?
How can capital durability eventually decrease the level of investment?
Are consumption and income positively related or are they negatively related?
They are positively, or directly related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
How does the income effect explain the change in quantity demanded that takes place when the price goes down?
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
How does the income effect explain the change in quantity demanded that takes place when price goes down?
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
