ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A decrease in the consumer’s income
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An increase in the price of the good on the vertical axis
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An increase in the price of the good on the horizontal axis
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all of the above
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Detailed explanation-1: -If the inflation rate increases, the purchasing power decreases for a given income level. On the other hand, if the income level increases for a given inflation rate, the purchasing power of the consumer increases.
Detailed explanation-2: -The correct option is d. When prices of goods and decreased, a consumer can buy more items with the same amount of money, thus, resulting in an increase in its purchasing power. Lastly, a decrease in the price of goods on the horizontal axis means a decrease in the prices of substitutes.
Detailed explanation-3: -Consumers lose purchasing power when prices increase. They gain purchasing power when prices decrease. Causes of purchasing power loss can include government regulations, inflation, and natural and human-made disasters. Causes of purchasing power gain include deflation and technological innovation.
Detailed explanation-4: -Answer and Explanation: The correct answer A.) a decrease in the price of a substitute good.
Detailed explanation-5: -When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes: the rationing function of prices.