The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.
A) substitution effect; lower price
B) intertemporal budget; higher price
C) income effect; higher price
D) intertemporal budget; lower price

Question

Quizplus · Accepted Answer

The term "income effect" describes a situation where a higher price causes a reduction in the buying power of income, even though actual income has not changed. This concept is part of consumer theory in economics, which analyzes how changes in relative prices and income affect consumer choices and behaviors.

The Term _____________ Describes a Situation Where a ________________ Causes

The Term _ Describes a Situation Where a ____ Causes