When does a change in price produce a real-income effect?
A) only if purchasing power is impacted significantly
B) only if purchasing power is impacted negatively
C) only if there is a substitution effect
D) only if there is an optimum effect
E) always

Question

Quizplus · Accepted Answer

A change in price produces a real-income effect when it significantly impacts the purchasing power of consumers, affecting their ability to buy goods and services.

When Does a Change in Price Produce a Real-Income Effect