The Real-Balances Effect Indicates That

question 122

Multiple Choice

The real-balances effect indicates that

• A)an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending.
• B)a lower price level will decrease the real value of many financial assets and therefore reduce spending.
• C)a higher price level will increase the real value of many financial assets and therefore increase spending.
• D)a higher price level will decrease the real value of many financial assets and therefore reduce spending.

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Definitions:

Alcohol Use Disorder

A disorder in which there's a decreased capability to discontinue or control the intake of alcohol, notwithstanding harmful repercussions on personal relationships, career, or health.

Nausea-producing Drug

A medication that can have the side effect of inducing nausea or increasing the likelihood of feeling sick.

Aversive Conditioning

A form of behavioral training in which an unpleasant or painful stimulus is associated with undesirable behaviors to discourage those behaviors.

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses through gradual exposure to the feared object or situation paired with relaxation exercises.