An Increase in the Price Level Decreases Planned Expenditure Because

question 204

Multiple Choice

An increase in the price level decreases planned expenditure because

• A) the real interest rate rises, increasing consumption expenditure.
• B) real wealth decreases, thus decreasing expenditure.
• C) domestic prices rise relative to foreign prices, increasing net exports.
• D) current prices rise relative to future prices, increasing expenditure.

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Definitions:

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