The Real-Income Effect Is Typically Small Because

question 82

Multiple Choice

The real-income effect is typically small because

• A) the change in price of one particular item has little effect on total purchasing power.
• B) income has no relation to consumption.
• C) price changes tend to balance out over time.
• D) real-incomes are always rising.

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Definitions:

Note Receivable

A written promise to pay a specified amount of money, with interest, by a certain date.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditure to the correct period.

Interest Payment

The amount paid by a borrower to a lender as a charge for borrowing money, usually expressed as an annual percentage of the principal amount.

Note Settlement

The process of satisfying the obligations of a promissory note, typically involving the repayment of the principal and accrued interest.