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

question 133

Multiple Choice

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

• A)Price level decreases cause firms and consumers to hold less money, which lowers the interest rate.Lower interest rates raise consumption and planned investment expenditures, which raises aggregate expenditure.
• B)Price level decreases reduce real wealth, which causes consumption spending and aggregate expenditure to rise.
• C)As the price level falls, government spending rises, which raises aggregate expenditure.
• D)Price level decreases in the United States relative to other countries lower net exports, which raises aggregate expenditure.
• E)As the price level falls, households become more optimistic about the future.