What is a household's real income?
What will be an ideal response?
A household's real income is the household's income expressed as a quantity of goods the household can afford to buy. Measured using a budget line, the household's real income is the maximum quantity of the specific goods or services plotted on the budget line.
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Which of the following will change the slopes of your indifference curves between gasoline and movie rentals?
A) a change in your preferences for either of the two goods B) only a change in the price of either of the two goods C) only a change in your income D) Both a change in the price of either good and a change in income will change the slopes of your indifference curves.
Inflation leads to bracket creep, which forces taxpayers to pay a larger percentage of their income in taxes, when
(a) Changes in the real purchasing power of their income do not keep pace with inflation. (b) Changes in the real purchasing power of their income keep pace with inflation. (c) Income tax codes change quickly as inflation emerges, impacting real purchasing power. (d) Income tax codes increase without taxpayer knowledge, forcing them to pay higher taxes than anticipated.