Suppose the cost of medical care rose 200 percent from 1990 to 2012,and average prices for the economy rose 150 percent.Relative to others,people who purchased medical care experienced a:

Question

Quizplus · Accepted Answer

Since the cost of medical care rose more than the average prices for the economy, people who purchased medical care would have faced a higher price effect, resulting in a lower real income. The wealth effect (change in purchasing power due to changes in real wealth) is not relevant in this scenario.

Suppose the Cost of Medical Care Rose 200 Percent from 1990