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:

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets such as cash, marketable securities, and accounts receivable.

Quick Ratio

A metric to evaluate a company's short-term liquidity position, calculated by dividing liquid assets by current liabilities.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity of the business.

Acid-Test Ratio

The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its short-term liabilities with its most liquid assets.