According to the Wealth Effect, When the Price Level Rises

question 141

Multiple Choice

According to the wealth effect, when the price level rises and other things remain the same,

• A) real consumption expenditure increases.
• B) real wealth decreases.
• C) there is no change in real wealth.
• D) real wealth increases.

---

Definitions:

Cash Budget

An estimation of the cash inflows and outflows for a business or individual for a specific period, highlighting the anticipated cash position.

Cash Receipts

The money a company receives from its various business activities, typically including sales, services, loans, or any transactions that bring cash into the organization.

Cash Disbursements

The process of paying out cash for various purposes, which could include expenses, investments, or dividends.

Master Budget

A comprehensive financial planning document that includes all of the subsidiary budgets within an organization, projecting its financial activities for the period.