In which of the following situations will an individual's purchasing power be unaffected?
A)all absolute prices fall by 15% and money income falls by 15%
B)all relative prices fall by 15% and money income falls by 15%
C)all relative prices rise by 15% and money income falls by 15%
D)all absolute prices remain constant and money income falls by 15%
E)all relative prices remain constant and money income rises by 15%

Question

Quizplus · Accepted Answer

When all absolute prices and money income fall by the same percentage, the individual's purchasing power remains unchanged because the ratio of income to prices stays the same.

In Which of the Following Situations Will an Individual's Purchasing