ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Menu costs
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Shoe leather costs
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Cost for savers
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Fixed incomes
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Borrowers
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Detailed explanation-1: -income effect. a higher price means that, in effect, the buying power of income has been reduced, even though actual income has not changed; always happens simultaneously with a substitution effect.
Detailed explanation-2: -43) The income effect of a price change refers to the change in the quantity demanded of a good. that results from a change in purchasing power as a result of the price change.
Detailed explanation-3: -Another example of the negative income effect is methods of travel. Someone who does not have much money may have to commute to work using the subway or a bus. Someone with a higher level of income may purchase a car and drive to work.
Detailed explanation-4: -What Is an Inferior Good? An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. These goods fall out of favor as incomes and the economy improve as consumers begin buying more costly substitutes instead.