If You Have $5,000 in Wealth and the Price Level

question 130

Multiple Choice

If you have $5,000 in wealth and the price level decreases 20 per cent, then

• A)the $5,000 will buy more goods and services.
• B)the real value of the $5,000 decreases.
• C)the real value of the $5,000 remains constant.
• D)the $5,000 will buy fewer goods and services.

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Definitions:

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Total Revenue

Total Revenue is the full amount of income generated by the sale of goods or services before any costs are deducted.

Perfectly Elastic Demand

Demand in which quantity drops to zero at the slightest increase in price.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to analyze the effect of one variable change while holding others constant.