The Wealth Effect Implies That

question 77

Multiple Choice

The wealth effect implies that:

• A)when consumer wealth goes up, consumers spend more
• B)when the price level decreases, consumer purchasing power goes up, and therefore consumers spend more
• C)when consumers are wealthier, they spend more, and therefore the price level increases
• D)when the price level decreases, consumers save more, and therefore become wealthier

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Definitions:

Intuitions

The capacity to grasp something through intuition rather than through logical thought.

Accuracy

The extent to which the outcome of a measurement, calculation, or specification matches the true value or a standard.

False News

Incorrect or misleading information presented as news, often with the intention of deceiving the audience.

Intentionally

Acting with a purpose or design, doing something on purpose.