Which of the following correctly describes how an increase in the price level affects consumption spending?
A) An increase in the price level lowers real wealth, which causes consumption to decrease.
B) An increase in the price level raises real wealth, which causes consumption to increase.
C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
D) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
A
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A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens
A) employment B) capital C) social benefit programs D) government spending
If a good has unitary price elasticity of demand, then the absolute value of the percentage change in
A. quantity exactly equals one. B. price exactly equals one. C. the quantity demanded equals the absolute value of the corresponding percentage change in price. D. quantity demanded and the absolute value of the corresponding percentage change in price both equal one-half and total one.
A vocal minority of economists, believers in the theory of rational expectations, insist that
a. the Phillips curve is downward sloping even in the short run. b. the Phillips curve is vertical even in the short run. c. a trade-off exists between inflation and unemployment even in the long run. d. expansionary fiscal and monetary policy can reduce unemployment without creating inflation.
Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to rise and monetary base to rise. b. Demand for real goods and services to remain the same and M2 money supply to remain the same. c. Demand for real goods and services to remain the same and M2 money multiplier to rise. d. Demand for real goods and services to rise and monetary base to remain the same.