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.

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Definitions:

Self-Actualization

The realization or fulfillment of one's talents and potentialities, especially considered as a drive or need present in everyone.

Hierarchy Of Needs

A framework proposed by Abraham Maslow that outlines a series of human needs ranging from the most basic physiological needs to higher-order needs of self-actualization.

Extraversion

An attribute of someone's character that involves the ability to socialize easily, communicate freely, be proactive, and express emotions vividly.

Awe

An emotional response to witnessing something majestic, grand, or beyond ordinary, often leading to a sense of being overwhelmed in a positive way.