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

question 50

Multiple Choice

In which of the following situations will an individual's purchasing power be unaffected?

• A)all absolute prices fall by 15% and money income falls by 15%
• B)all relative prices fall by 15% and money income falls by 15%
• C)all relative prices rise by 15% and money income falls by 15%
• D)all absolute prices remain constant and money income falls by 15%
• E)all relative prices remain constant and money income rises by 15%

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Definitions:

Economic Income

An individual's total earnings, including wages, salaries, investments, and other sources, assessed for economic analysis.

Capital Gains

The profit earned from the sale of an asset or investment which has increased in value over the holding period.

Double Taxation

The imposition of two or more taxes on the same income, asset, or financial transaction.

Income Tax

Income tax is a tax levied by governments on individuals or entities based on their income or profits, with rates varying according to income levels.