The Three Reasons That the Economy-Wide Price Level and the Level

question 27

Multiple Choice

The three reasons that the economy-wide price level and the level of real GDP move in opposite directions are

• A)the Pigou effect, the foreign trade effect, and the real savings effect.
• B)the foreign trade effect, Keynes's interest rate effect, and the price effect.
• C)the Pigou effect, Keynes's interest rate effect, and the foreign trade effect.
• D)the foreign trade effect, the government intervention effect, and the real savings effect.

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Definitions:

Specific Price

A definite and unambiguous cost assigned to a particular item or service.

Reasonable Price

A price that is considered fair and appropriate for the goods or services offered, taking into account various factors like market conditions, costs, and value provided.

Sale of Goods

A transaction in which ownership of tangible personal property is transferred from one party to another for a price.

Warranty

A guarantee provided by a seller or manufacturer regarding the condition of its product and the commitment to repair or replace defective parts within a specified period.