The Real Balances Effect Suggests That

question 177

Multiple Choice

The real balances effect suggests that

• A)when prices are higher your buying power is less so you buy less.
• B)when prices are higher you buy less of what you originally wanted and use something else instead.
• C)when prices are higher buy fewer because the marginal utility of a good is diminishing.
• D)when prices are higher you buy more.

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