In the context of aggregate demand and aggregate supply, the wealth effect refers to the idea that, when the price level decreases, the real wealth of households
a. increases and as a result consumption spending increases. This effect contributes to the downward slope of the aggregate-demand curve.
b. decreases and as a result consumption spending increases. This effect contributes to the upward slope of the aggregate-supply curve.
c. increases and as a result households increase their money holdings; in turn, interest rates increase and investment spending decreases. This effect contributes to the downward slope of the aggregate-demand curve.
d. decreases and as a result households increase their money holdings; in turn, interest rates increase and investment spending decreases. This effect contributes to the upward slope of the aggregate-supply curve.
a
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As long as the amount of food stamps an individual receives is less than they would have spent on food without the food stamps, the food stamps act like a straight income transfer
a. True b. False
The primary purpose of economics is to understand how people make
A) money. B) goods and services. C) choices. D) a comfortable living.
A concave production possibilities frontier exhibits
a. increasing opportunity cost b. decreasing opportunity cost c. constant opportunity cost d. diminishing returns e. returns to scale
Unemployment means that
A. people are not willing to work at the going wage rate. B. there is excess demand in the labor market. C. there are some people who will not work at the going wage rate. D. at the going wage rate, there are people who want to work but cannot find work.