The foreign income effect depends on:
A) the size of the income change and the income elasticity of demand.
B) the size of the income change and the size of the country's wealth.
C) the size of the country's wealth and the income elasticity of demand.
D) the size of the income change and the inflation rate.
E) None of the above

Question

Quizplus · Accepted Answer

The foreign income effect is influenced by the size of the income change and the income elasticity of demand, as these factors determine how changes in income affect demand for imported goods.

The Foreign Income Effect Depends On