The _____ depicts the change in a consumer's real purchasing power brought about by a change in the price of a good.

Question

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The income effect shows how a change in the price of a good affects a consumer's real income and therefore their ability to purchase other goods. When the price of a good that a consumer regularly purchases increases, their real income decreases and they are not able to purchase as much of other goods as before, reducing their overall purchasing power. This is known as the income effect.

The _____ Depicts the Change in a Consumer's Real Purchasing