Which of the following best describes the concept of 'Income Effect' in consumer theory?
A. Change in quantity demanded due to a change in real income resulting from a price change
B. Change in supply due to a change in input prices
C. Change in quantity demanded due to a change in relative prices holding real income constant
D. Change in demand due to a change in tastes
Answer: Option A
Solution (By JKSSB Mock Tests)
The income effect refers to the change in quantity demanded of a good that results solely from the change in real income caused by a change in the price of the good.
Explanation:
Under the Monetary Policy Framework Agreement, the primary objective of the RBI is to maintain price stability while keeping in mind the objective of growth.
No comments yet. Be the first to start the discussion!