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Income Effect

General scientific definition

"The change in demand for a good or service caused by a change in a consumer's purchasing power resulting from a change in real income." (Investopedia,  https://www.investopedia.com/terms/i/incomeeffect.asp)

Together with the substitution effect it creates the 'price effect'.

Relevant substantive theories

Micro-economics

Consumer choice theory

Sources

Examples

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