The Real Balances Effect Says That an Increase in the Price

question 130

Multiple Choice

The real balances effect says that an increase in the price level

• A)Increases the price of U.S.produced goods,causing Americans to buy more imported goods.
• B)Increases the price of U.S.produced goods,causing foreign consumers to buy fewer U.S.goods.
• C)Increases the need to borrow,which drives up interest rates and reduces loan-financed purchases.
• D)Reduces the real value of a fixed amount of savings,consequently reducing the quantity of goods and services purchased.

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Definitions:

Ion

An atom or molecule with an electric charge due to the loss or gain of one or more electrons.

Electrolytes

Minerals in the body that have an electric charge, important for maintaining proper fluid balance and muscle function.

Cations

Positively charged ions that are formed when an atom loses one or more electrons, commonly found in various biological and chemical processes.

Anions

are negatively charged ions, which are atoms or molecules that have gained one or more electrons.