The Real-Balances Effect on Aggregate Demand Suggests That a

question 49

Multiple Choice

The real-balances effect on aggregate demand suggests that a

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

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Definitions:

Sherman Act

A landmark federal statute in the antitrust law of the United States, passed in 1890, that outlaws monopolistic business practices.

U.S. Corporations

Entities that are incorporated under the laws of a particular state in the United States, distinguished by having legal identities separate from their owners.

Trade Barriers

Measures imposed by governments or public authorities to regulate foreign trade and protect domestic industries from foreign competition.

Import Quotas

Limits set by a government on the amount or number of goods that can be imported into a country over a set period of time.