When the Price of One Good Increases,the Associated Income Effect

question 39

Multiple Choice

When the price of one good increases,the associated income effect is represented by a move from one indifference curve to a:

• A) lower indifference curve since real income is now higher.
• B) lower indifference curve since real income is now lower.
• C) higher indifference curve since real income is now higher.
• D) higher indifference curve since real income is now lower.

---

Definitions:

Depreciation

An accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy.

GDP Deflator

A measure of the price level of all newly produced, domestic, final goods and services in an economy, used to adjust GDP for inflation.

GDP Deflator

A means of determining the price rates for all new, domestically crafted, final goods and services within an economy.

Real GDP

Real GDP (Gross Domestic Product) measures a country's economic output adjusted for inflation, providing a more accurate view of an economy's size and growth rate over time.