The Pigou Effect Suggests That Falling Prices Will Increase Income

question 75

Multiple Choice

The Pigou effect suggests that falling prices will increase income because real balances influence ______ and will shift the ______ curve.

• A) money demand; LM
• B) the money supply; LM
• C) consumer spending; IS
• D) government spending; IS

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Definitions:

LAN

Local Area Network, a network that connects computers and devices in a limited geographical area like a home or office.

Digital Literacy

The ability to effectively find, use, summarize, create, and communicate information in a digital environment, encompassing a broad range of skills and knowledge.

Internet Scams

Fraudulent or deceptive activities carried out over the internet with the intent of stealing money or personal information.

Cyber Criminals

Individuals or groups that engage in illegal activities online, including fraud, hacking, and identity theft.