Why Does an Increase in the Price Level Tend to Cause

question 56

Multiple Choice

Why does an increase in the price level tend to cause the consumption function to shift downward?

• A)An increase in the price level decreases disposable income.
• B)An increase in the price level increases the demand for fixed money assets.
• C)An increase in the price level decreases the value of fixed money assets.
• D)An increase in the price level decreases saving and increases debt.

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Definitions:

Depreciation Life

The estimated period over which a tangible asset is expected to be used in business operations, for the purpose of calculating depreciation.

Straight Line

A method of depreciation that allocates an asset’s cost evenly throughout its useful life.

Ice Cream Machine

A device designed to produce ice cream on a commercial or domestic scale by freezing and churning ingredients.

Tax Schedule

A detailed plan or system for calculating tax liabilities based on income, deductions, and credits according to relevant laws and regulations.