In the Context of Aggregate Demand and Aggregate Supply,the Wealth

question 43

Multiple Choice

In the context of aggregate demand and aggregate supply,the wealth effect refers to the idea that,when the price level decreases,the real wealth of households

• A)increases and as a result consumption spending increases.This effect contributes to the downward slope of the aggregate-demand curve.
• B)decreases and as a result consumption spending increases.This effect contributes to the upward slope of the aggregate-supply curve.
• C)increases and as a result households increase their money holdings;in turn,interest rates increase and investment spending decreases.This effect contributes to the downward slope of the aggregate-demand curve.
• D)decreases and as a result households increase their money holdings;in turn,interest rates increase and investment spending decreases.This effect contributes to the upward slope of the aggregate-supply curve.

---

Definitions:

Obsessive-compulsive Disorder (OCD)

A mental disorder characterized by recurrent, unwanted thoughts (obsessions) and/or repetitive behaviors (compulsions) that the individual feels driven to perform.

Rituals

Prescribed or established ceremonies that are often performed for religious, cultural, or social purposes, characterized by a series of formal actions.

Major Depression

A mental disorder characterized by persistent sadness, loss of interest in activities, and a range of emotional and physical problems.

Emotional

Pertaining to feelings or emotions, often describing intense, complex, or subjective experiences related to mood, temperament, or relationships.