For a Consumer,which of the Following Statements About the Real-Income

question 39

Multiple Choice

For a consumer,which of the following statements about the real-income effect is true?

• A) It matters only when prices change enough to cause a measurable effect on the purchasing power of a consumer's income.
• B) It can be observed for any price change.
• C) It occurs when a consumer buys more of a good as a result of a relative price change.
• D) It matters only when prices change enough to cause a consumer to purchase more of the good whose price changed.
• E) The purchasing power of your income increases when the price of a good increases.

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Definitions:

Cash Commodity Subsidies

Financial support provided by governments to farmers for certain commodities, paid in cash.

Countercyclical Payments

Government payments to agricultural producers that increase when market prices fall below certain thresholds, aiming to stabilize farmers' incomes.

Farm Subsidies

Governmental financial support to farmers aimed at stabilizing food prices, ensuring a stable food supply, and supporting agricultural economic activities.