The wealth or real balances effect indicates that
A. An increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending.
B. A lower price level will decrease the real value of many financial assets and therefore cause a decline in spending.
C. A higher price level will increase the real value of many financial assets and therefore cause a decline in spending.
D. A higher price level will decrease the real value of many financial assets and therefore cause a decline in spending.
D. A higher price level will decrease the real value of many financial assets and therefore cause a decline in spending.
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Explain what will happen to the equilibrium price and quantity of satellite TV service if the wages of the workers who provide the satellite TV service increase while at the same time the price of cable television service (a substitute for satellite
TV service) also increases.
If net exports are negative
A) net foreign investment is positive. B) capital inflows must be less than capital outflows. C) net foreign investment is also negative. D) Both A and B are correct.
The largest sector of a developing country is usually
a. agriculture b. manufacturing c. services d. infrastructure e. none of the above
Taxes that create an excess burden are bad.
A. True B. False C. Uncertain