Suppose Finley spends $1,000 a year on food. The government now gives him $500 in food stamps.

What do we know about Finlay's spending? Assume food is a normal good.

1.The effect of the food stamps on Finley's cash expenditure must be the same as the effect of a hypothetical $500 gift in cash

2.The effect of the food stamps on Finley's cash expenditure must be the same as the effect of a hypothetical $500 voucher than can be spent only on non-food

3.Finlay might consume exactly $1,000 a year on food

4.Finlay might consume less than $1,000 a year on food