Suppose the Price Level Increases

question 8

Multiple Choice

Suppose the price level increases.Other things constant, will consumption spending increase or decrease?  

• A) increase, because real income rises 
• B) decrease, because real income rises 
• C) increase, because the real value of wealth increases 
• D) decrease, because the real value of wealth decreases

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Definitions:

Sensation Seeker

An individual who is characterized by the pursuit of experiences and feelings that are varied, novel, complex, and intense.

Need For Achievement

A psychological trait that drives individuals to pursue and attain challenging goals, often with a significant emphasis on excellence and overcoming obstacles.

Homeostasis

The dynamic process through which biological systems maintain stability and optimal internal conditions despite external changes.

Drives

Basic, innate urges that motivate behavior, such as hunger or thirst.