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AP® Microeconomics

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Moderate

Income Effect: Impact of Price on Real Income

APMICR-BMBV1N

If the price of products rises, what happens to a consumer's real income?

A

It increases.

B

It decreases.

C

It stays the same.

D

It decreases only for goods for which demand is relatively inelastic.

E

Not enough information is given to determine the impact.