The Income Effect of a Price Change Refers to the Impact

question 153

Multiple Choice

The income effect of a price change refers to the impact of a change in

• A)income on the price of a good.
• B)demand when income changes.
• C)the quantity demanded when income changes.
• D)the price of a good on a consumer's purchasing power.

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Definitions:

Purchase Assets

The act of acquiring ownership or a controlling interest in physical or intangible items that have value, for operational or investment purposes.

Real Assets

Physical or tangible assets such as real estate, commodities, and natural resources.

Future Cash Flows

Projections of the amount of money that is expected to be generated by an investment in the future.

Financial Assets

Assets that derive value from a contractual claim, such as bank deposits, stocks, bonds, and derivatives.