If the Price Level Increases,other Things Constant,consumption Spending

question 17

Multiple Choice

If the price level increases,other things constant,consumption spending

• A)increases because real income rises
• B)decreases because real income rises
• C)increases because the real value of wealth increases
• D)decreases because the real value of wealth decreases
• E)increases because nominal income increases

---

Definitions:

Net Operating Income

The profit from a company's operations after subtracting operating expenses from gross income.

Operating Assets

Assets utilized in the day-to-day operations of a business to generate revenue, including machinery, buildings, and equipment.

Residual Income

The income that remains after subtracting all required costs of capital from operating income, a measure of profitability.

Minimum Required Rate

The lowest rate of return that an investment must yield to be considered acceptable, often tied to the cost of capital or inflation.