An Increase in the Price Level Results in a Decline

question 7

Multiple Choice

An increase in the price level results in a decline in aggregate demand because higher prices will cause the nominal interest rates to increase and GDP to drop. This effect is called the:

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

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Definitions:

Expert Power

The influence one possesses as a result of experience, special skill, or knowledge, which others see as valuable.

Social Power

Pertains to the ability of an individual or group to influence the behavior of others within a social structure.

Expert Power

The influence one holds as a result of one's expertise, skill, or knowledge.

Interpersonal Power

The ability of an individual to influence the behavior of others in a social context.