In a Two-Good,one-Period Model,an Increase in the Terms of Trade

Multiple Choice

In a two-good,one-period model,an increase in the terms of trade when good b is initially imported implies

A) the income and substitution effects for good a move in the same direction.
B) a negative income effect for the SOE.
C) the income and substitution effects for good b move in the same direction.
D) the income effects and subsitution effects for good b cancel each other out.
E) a negative substitution effect for the SOE.