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Worksheet 46.1: Income and Substitution Effects The income and the substitution effects can explain movement along a demand. Your job is to state which \"effect\" (income or substitution) would be represented by the following in terms of the downward sloping demand curve. Then indicate the direction of movement along the curve. The rst item is done for you. Event Which effect? Up or Down Demand Curve 1. The price of a jar of the store brand Both Substitution Down of peanut butter drops to 50 cents and Income Effect lower than the major brand. 2. Income taxes go down across the state. 3. The government issues a $200 rebate per family. 4. A major brand of running shoes decides to increase their price of their line of running shoes by 5%. 5. The Affordable Health Care Act decreases everyone's health care premium in America by 20%. 6. Consumer income increases while ination increases. 7. Sales tax increase by 2%. 8. Sales tax increase while the price of a particular brand of jelly goes down. 9. 10. The price of frozen blueberries is $2 while the price of fresh blueberries is $4