When restaurant prices rise faster than prices of food at grocery stores,real income rises for people who visit restaurants relative to those who cook for themselves.

Question

Quizplus · Accepted Answer

If restaurant prices rise faster than prices of food at grocery stores, it means that the cost of eating out is becoming more expensive relative to cooking at home. This would lead to a decrease in the real income for people who visit restaurants, as they have to spend more to maintain the same level of consumption. On the other hand, people who cook for themselves would benefit from the lower prices of food at the grocery store and therefore see an increase in their real income.

When Restaurant Prices Rise Faster Than Prices of Food at Grocery