As Prices Rise, Consumers and Businesses Will Want to Hold

question 208

Multiple Choice

As prices rise, consumers and businesses will want to hold larger money balances. This will lead to

• A) a reduction in the demand for resources and reduced resource prices.
• B) an increase in the amount of goods and services demanded due to the real balance effect.
• C) an increase in exports due to the international substitution effect.
• D) a reduction in the supply of loanable funds and an increase in the interest rate.