- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Topics in Demand and Supply Analysis
- Subject 3. Substitution Effect, Income Effect, Normal and Inferior Goods
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 ______.
B. substitution effect
C. income effect
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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