The income effect of a price change suggests that
A) as income increases, a consumer will purchase fewer normal goods and more inferior goods.
B) if the price of a good goes down, it will increase a consumer's purchasing power.
C) consumer demand will increase if the income tax is increased.
D) if the price of a good increases, consumers will be able to purchase more of other goods because of the increase in the purchasing power of income.
Correct Answer:
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