-What is the effect on income if there is a decrease in the price of a product?
A)It will increase consumers' real income while leaving their actual income unchanged.
B)It will increase consumers' actual income while leaving their real income unchanged.
C)It will decrease demand.
D)It will have no effect on income.

Question

-What is the effect on income if there is a decrease in the price of a product?
A)It will increase consumers' real income while leaving their actual income unchanged. 
B)It will increase consumers' actual income while leaving their real income unchanged. 
C)It will decrease demand. 
D)It will have no effect on income.

Quizplus · Accepted Answer

A decrease in the price of a product increases consumers' real income because they can now buy more with the same amount of money, even though their actual income hasn't changed. This is because real income refers to the purchasing power of income, i.e., the quantity of goods and services that can be purchased with a given amount of money income.

-What Is the Effect on Income If There Is a Decrease