The term _ describes a situation where a ____ causes a reduction in the buying power of income, even though actual income has not changed.

Income effect is a change in demand for a good or service as a result of a change in a consumer's purchasing power resulting from a change in income or price.

If price increases, the purchasing power is reduced and as a result of the income effect, the demand for a good falls.

Income effect is one of the factors that explain a downward sloping demand curve. the other effect is the substitution effect

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.

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The term _ describes a situation where a ____ causes a reduction in the buying power of income, even though actual income has not changed.