An Increase in the Price Level Decreases Planned Expenditure Because

question 85

Multiple Choice

An increase in the price level decreases planned expenditure because

• A)current prices rise relative to future prices, increasing expenditure.
• B)the real interest rate rises, increasing consumption expenditure.
• C)domestic prices rise relative to foreign prices, increasing net exports.
• D)real wealth decreases, thus decreasing expenditure.

---

Definitions:

Sales Taxes Payable

Liability accounts that record the sales tax collected from customers on behalf of governmental authorities, to be paid in the future.

Cash Sales

Sales transactions where payment is made in cash at the time of purchase, without any delay.

Sales Taxes

Taxes imposed by governments on the sale of goods and services, typically calculated as a percentage of the sales price.