Which of the Following Is a Reason Why Decreases in the Price

question 248

Multiple Choice

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

• A)Price level decreases cause firms and consumers to hold less money,which lowers the interest rate.Lower interest rates raise consumption and planned investment expenditures,which raises aggregate expenditure.
• B)Price level decreases reduce real wealth,which causes consumption spending and aggregate expenditure to rise.
• C)As the price level falls,government spending rises,which raises aggregate expenditure.
• D)Price level decreases in the United States relative to other countries' lower net exports,which raises aggregate expenditure.

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Definitions:

Social Experiences

Interactions with others and the environment that contribute to the development of an individual's beliefs, attitudes, and behaviors.

Habituation-Dishabituation

The process by which an organism decreases or stops its response to a repetitive stimulus (habituation) and then increases its response again when the stimulus changes or is new (dishabituation).

Cognitive Abilities

The mental skills that involve the ability to reason, plan, solve problems, think abstractly, and learn.

Addition Problem

A mathematical operation where two or more quantities are combined to make a sum.