In which of the following situations will an individual's purchasing power be unaffected?
A)money income falls and the price of one good falls
B)money income is cut in half and prices of all goods and services remain constant
C)money income doubles and the prices of all goods and services are cut in half
D)money income is cut in half and the prices of all goods and services fall by 50%
E)money income doubles and the prices of all goods and services remain constant

Question

Quizplus · Accepted Answer

When both money income and prices of all goods and services fall by 50%, the individual's purchasing power remains unaffected because the relative change in income and prices is the same, maintaining the ability to purchase the same quantity of goods and services.

In Which of the Following Situations Will an Individual's Purchasing