The _______ refers to the impact a lower price for medical care has on the real purchasing power of consumers.

Question

Quizplus · Accepted Answer

The income effect refers to the change in the real purchasing power of consumers due to a change in price. If the price for medical care decreases, consumers may be able to purchase more medical care with their existing income, thus increasing their real purchasing power. This is known as the income effect. The other options (B) inflation rate, (C) effective demand, (D) substitution effect, and (E) nominal demand are not directly related to the impact of lower medical care prices on consumer purchasing power.

The _______ Refers to the Impact a Lower Price for Medical