Difference between revisions of "Income Effect"

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m (Corrected misinterpretation of deflation. (Deflation is happening right now in Japan and Finnland.) Added Bible verse.)
(I'd be happy to look for other anecdotes that illustrate the income effect, but the connection to this one seemed tenuous)
 
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The Income Effect is the effect that occurs when the price of a [[good]] you buy decreases, such that the money you save actually increases your income.  For example, if you drink a gallon of milk each week and the price of that gallon decreases by 25 cents, then you have 25 cents extra to spend on something else.  It is as though your income went up by 25 cents.
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#REDIRECT [[Income effect]]
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The Bible says, "Therefore is the kingdom of heaven likened unto a certain king, which would take account of his servants. And when he had begun to reckon, one was brought unto him, which owed him ten thousand talents. But forasmuch as he had not to pay, his lord commanded him to be sold, and his wife, and children, and all that he had, and payment to be made. The servant therefore fell down, and worshipped him, saying, Lord, have patience with me, and I will pay thee all. Then the lord of that servant was moved with compassion, and loosed him, and forgave him the debt.
 
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But the same servant went out, and found one of his fellowservants, which owed him an hundred pence: and he laid hands on him, and took him by the throat, saying, Pay me that thou owest. And his fellowservant fell down at his feet, and besought him, saying, Have patience with me, and I will pay thee all. And he would not: but went and cast him into prison, till he should pay the debt.
 
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So when his fellowservants saw what was done, they were very sorry, and came and told unto their lord all that was done. Then his lord, after that he had called him, said unto him, O thou wicked servant, I forgave thee all that debt, because thou desiredst me: Shouldest not thou also have had compassion on thy fellowservant, even as I had pity on theep And his lord was wroth, and delivered him to the tormentors, till he should pay all that was due unto him." -- Matthew 18:23-34
 
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[[Category:Economics]]
 

Latest revision as of 02:12, May 30, 2009

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