Which of the Following Is a Reason Why Increases in the Price

question 102

Multiple Choice

Which of the following is a reason why increases in the price level result in a decline in aggregate expenditure?

• A)Price level increases raise real wealth, which causes consumption spending and aggregate expenditure to decline.
• B)Price level increases cause firms and consumers to hold more money, which raises the interest rate, ceteris paribus. Higher interest rates lower consumption and planned investment expenditures, which lowers aggregate expenditure.
• C)Price level increases in Australia relative to other countries raise net exports, which lowers aggregate expenditure.
• D)As the price level rises, government spending falls, which lowers aggregate expenditure.

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Definitions:

Femoral Artery

A major blood vessel in the thigh responsible for delivering blood to the lower leg.

Aortic Arch

The curved portion of the aorta, the largest artery in the body, from which major arteries to the head and arms branch off.

External Iliac Artery

A major artery which arises from the common iliac artery to supply blood to the lower limb.

Iliolumbar Artery

An artery that supplies blood to the ilium and lumbar regions of the spine.