As prices rise, people will buy fewer goods and services because:
A. the interest rate has declined.
B. aggregate demand has increased.
C. the purchasing power of the fixed quantity of money has declined.
D. the income of households has increased.
Answer: C
You might also like to view...
Which of the following statements is true?
A) Theories are statistics that describe the real world. B) Hypotheses are predictions that can be tested with data. C) Data are facts established by observation and measurement. D) Empirical evidences are facts, measurements, or statistics that describe the world.
In the Friedman-Lucas money surprise model, a surprise increase in money supply growth
A) has no effect on inflation. B) increases inflation less than in proportion to the growth rate of the money supply. C) increases inflation in an equal proportion to the growth rate of the money supply. D) increases inflation more than in proportion to the growth rate of the money supply.
In the long-run equilibrium in perfect competition, consumer surplus is
A) positive. B) negative. C) zero. D) less than producer surplus.
The law of increasing additional cost is due to
A) scarcity. B) inefficient use of technology. C) the fact that resources are not perfectly adaptable for alternative uses. D) the fact that there are always alternatives and it is costly to figure out which alternative is best.