The Real-Balances Effect Indicates That

question 122

Multiple Choice

The real-balances effect indicates that

• A)an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending.
• B)a lower price level will decrease the real value of many financial assets and therefore reduce spending.
• C)a higher price level will increase the real value of many financial assets and therefore increase spending.
• D)a higher price level will decrease the real value of many financial assets and therefore reduce spending.

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Definitions:

Pre-Existing Duty

An obligation that a party is already legally obliged to perform, which is not considered sufficient to serve as consideration for a new contract.

Legal Sufficiency

The adequacy of evidence in meeting legal standards to support a finding or conclusion in a legal proceeding.

Bargained-For-Exchange

A fundamental concept in contract law that requires each party to provide something of value to the other for a contract to be valid.

Statutorily Enforceable

Refers to rights or obligations that are created, recognized, and enforced through specific statutes or laws enacted by a legislative body.