Which of the Following Is Incorrect

question 85

Multiple Choice

Which of the following is incorrect?

• A)As the Canadian price level rises, Canadian goods become relatively more expensive so that its exports fall and its imports rise.
• B)As the price level falls, the demand for money declines, the interest rate declines, and interest rate-sensitive spending increases.
• C)When the price level increases, real balances increase, businesses and households find themselves wealthier and therefore increase their spending.
• D)Given aggregate demand, an increase in aggregate supply increases real output and, assuming downward flexible prices, reduces the price level.

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Definitions:

Deadweight Loss

Is a loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Wine Producers

Businesses or individuals involved in the cultivation of grapes and the production and marketing of wine.

Tax Impact

The effect that taxation has on individual or corporate financial conditions.

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in its price.