When the Price Level Increases,ceteris Paribus,it Causes Households and Firms

question 99

Multiple Choice

When the price level increases,ceteris paribus,it causes households and firms to try to

• A)reduce money balances,which drives interest rates down.
• B)reduce money balances,which drives interest rates up.
• C)reduce money balances,which drives national income up.
• D)increase money balances,which drives interest rates down.
• E)increase money balances,which drives interest rates up.