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For most of her life, Natalie has operated on a pretty tight budget. She was a price-conscious shopper and usually bought store or generic brands to save money. Recently, however, Natalie was given a pretty substantial raise. Since then she has altered her shopping patterns and now regularly buys more expensive, name-brand goods. This is an example of

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This is an example of Income Effect

The income effect means that the change in demand for a good or service which is caused by the change in a consumer's purchasing power resulting from the change in real income.

What is Income Effect ?

The income effect in microeconomics is 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.

  • The income effect can be both direct (when it is directly related to a change in income) or indirect (when consumers must make buying decisions not directly related to their incomes).

  • This means consumers will generally spend more if they experience an increase in income. They may spend less if their income drops.

Learn more about Income Effect here:

https://brainly.com/question/15300267

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