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

question 177

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.Higher interest rates lower consumption and planned investment expenditures,which lowers aggregate expenditure.
• C)Price level increases in the United States 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:

Scrip Dividend

A method of paying dividends in the form of additional shares instead of cash.

Earnings Per Share

A financial ratio that measures the portion of a company's profit allocated to each outstanding share of common stock.

Declaration Date

The specific day on which a company’s board of directors announces its intent to pay a dividend to shareholders.

Legal Obligation

A duty imposed by law that requires an entity or individual to perform or refrain from performing a certain action.