In the Context of Aggregate Demand and Aggregate Supply,the Wealth

question 43

Multiple Choice

In the context of aggregate demand and aggregate supply,the wealth effect refers to the idea that,when the price level decreases,the real wealth of households

• A)increases and as a result consumption spending increases.This effect contributes to the downward slope of the aggregate-demand curve.
• B)decreases and as a result consumption spending increases.This effect contributes to the upward slope of the aggregate-supply curve.
• C)increases and as a result households increase their money holdings;in turn,interest rates increase and investment spending decreases.This effect contributes to the downward slope of the aggregate-demand curve.
• D)decreases and as a result households increase their money holdings;in turn,interest rates increase and investment spending decreases.This effect contributes to the upward slope of the aggregate-supply curve.

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Definitions:

Material

Significant information or items necessary for the production of goods or the performance of tasks, often considered vital to the outcome of a process.

Section 427

This does not specify a context from which to derive a precise definition, as it might refer to specific sections of different laws or regulations depending on the context.

Chartered Bank

A financial institution established under a specific charter granted by the government, allowing it to offer banking services.

Bona Fide Purchasers

Individuals who buy something in good faith without knowledge of any defects or claims against the item.