Which of the Following Correctly Describes How an Increase in the Price

question 180

Multiple Choice

Which of the following correctly describes how an increase in the price level affects consumption spending?

• A)An increase in the price level raises real wealth, which causes consumption to increase.
• B)An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
• C)An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
• D)An increase in the price level lowers real wealth, which causes consumption to decrease.
• E)An increase in the price level, lowers the nominal interest rate which increases purchases of consumer durables.

---

Definitions:

Competitive Advantage

The attributes or conditions that allow a company or country to produce a good or service at a lower price or in a more desirable fashion for customers than competitors.

Innovative

The quality of being able to create new ideas, products, or methods; characterized by originality and the ability to solve problems or address needs in novel ways.

Market-Leading

A Market-Leading company is one that holds a dominant position in its industry or sector, characterized by the highest market share, strong brand recognition, and a significant influence over market trends.

Family Leadership

The role of guiding and influencing a family, managing its relationships and assets, often in the context of a family business.