The Real-Income Effect Shows That

Multiple Choice

The real-income effect shows that

A) a decrease in the price of a good increases the purchasing power of the consumer's income.
B) if the consumer's income rises, he or she buys more of inferior goods and less of normal goods.
C) if a good is inferior, a decrease in the purchasing power of income results in less of the good being consumed.
D) when the price of a good rises, consumers are able to buy more of other goods because of the increase in the purchasing power of income.