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Factor completely.
Income Effect
The adjustment in demand for goods and services triggered by a change in consumers' discretionary income.
Income Increases
Situations where an individual's or household's earnings rise, potentially affecting their spending, saving, and investment behaviors.
Budget Constraints
The limitations on the consumption choices of individuals or organizations due to limited resources.
Substitution Effect
The economic principle that as prices rise or incomes decrease, consumers will replace more expensive items with less costly alternatives.
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