Why Does a Decrease in the Price Level Induce an Increase

question 232

Multiple Choice

Why does a decrease in the price level induce an increase in the aggregate quantity of goods and services demanded?

• A) because as wealth falls, interest rates rise, and the dollar appreciates
• B) because as wealth falls, interest rates rise, and the dollar depreciates
• C) because as wealth rises, interest rates rise, and the dollar appreciates
• D) because as wealth rises, interest rates fall, and the dollar depreciates