Which of the Effects Listed Below Increases the Quantity of Goods

question 84

Multiple Choice

Which of the effects listed below increases the quantity of goods and services demanded when the price level falls and decreases the quantity of goods and services demanded when the price level rises?

• A)the wealth effect
• B)the interest-rate effect
• C)the exchange-rate effect
• D)All of the above are correct.

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Definitions:

Creative Destruction

A process where new innovations cause the demise of older industries or technologies, leading to economic growth and development.

Economic Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Automobile Production

is the series of processes involved in manufacturing automobiles, including assembly, painting, and quality control, among others.

Allocative Efficiency

Allocative efficiency occurs when resources are distributed in a way that maximizes the net benefit to society, matching consumer preferences with production.