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:

Trophic Level

Position of an organism in a food chain.

Chaparral Biome

A biome characterized by dense, spiny shrubs and a Mediterranean climate, with hot, dry summers and mild, wet winters, typically found in California and the Mediterranean region.

Primary Production

The rate at which an ecosystem’s producers capture and store energy.