As the Price Level Decreases, What Happens to the Value

question 83

Multiple Choice

As the price level decreases, what happens to the value of money?

• A) It increases, so people want to hold more of it.
• B) It increases, so people want to hold less of it.
• C) It decreases, so people want to hold more of it.
• D) It decreases, so people want to hold less of it.

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Definitions:

Callable Bond

A type of bond that the issuer has the right to repay before its maturity date, at a predetermined call price.

Sinking Fund

A reserve fund established by a company to repay debt or replace a major asset in the future.

Income Bond

A type of bond that only pays interest if the issuing corporation has earned enough income to cover the interest payments, often used by companies in financial distress.

Registered Form

Registrar of company records ownership of each bond; payment is made directly to the owner of record.