An Increase in the Price Level Results in a Decline

question 66

Multiple Choice

An increase in the price level results in a decline in aggregate demand because people's "net worth" decreases and will spend less. This effect is called the:

• A) interest rate effect.
• B) income effect.
• C) wealth effect.
• D) trade effect.

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Definitions:

Credit Sales

Transactions where goods or services are sold and payment is delayed, often creating accounts receivable.

Compounded Monthly

Interest calculation method that adds interest to the principal balance monthly, increasing the amount of subsequent interest.

Single Payment

A one-time transfer of money to settle a debt or purchase.

Due

Refers to the date or time by which something is expected to be completed or fulfilled, such as a payment or assignment.