CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Suppose that an increase in the price of good Y results in an increase in the consumption of good X. This is an example of the ______.

A. demand effect
B. substitution effect
C. income effect
Correct Answer: B

The substitution effect is the change in consumption resulting from a change in the relative price of a good.

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