Which one of the following is always true of the income effect?
A)It leads to a positive income effect.
B)It is positive.
C)It decreases consumption.
D)It leads to a negative income effect.
E)None of the above

Question

Quizplus · Accepted Answer

The income effect can be positive, negative, or zero depending on the nature of the good and the direction of the change in income. It is not always true that the income effect is positive or negative or that it decreases consumption. Therefore, none of the options given is always true.

Which One of the Following Is Always True of the Income