When the price of a good that a person is consuming falls, other things being constant, there is
A) a decline in real income.
B) a decline in purchasing power.
C) a real income effect.
D) no change in purchasing power.

Question

Quizplus · Accepted Answer

When the price of a good falls, the consumer experiences a real income effect, meaning they can afford to buy more of the good or other goods with the same amount of money, effectively increasing their purchasing power.

When the Price of a Good That a Person Is