The change in demand resulting from this change in real purchasing power is called:

A) the income effect.
B) the substitution effect.
C) the wealth effect.
D) the price effect.

Real Purchasing Power

The amount of goods and services that can be purchased with a unit of currency, taking into account changes in prices due to inflation or deflation.

Income Effect

The change in an individual's consumption choices resulting from a change in real income, due to price changes or income changes.

Substitution Effect

The change in consumption patterns due to a change in relative prices, causing consumers to replace pricier items with more affordable substitutes.