Ceteris Paribus,if Average Prices in the U

question 91

Multiple Choice

Ceteris paribus,if average prices in the U.S.economy fall,then the

• A)Real balances effect will lead to a lower quantity of U.S.output demanded.
• B)Foreign trade effect will lead to a lower quantity of U.S.output demanded.
• C)Interest rate effect will lead to a higher quantity of U.S.output demanded.
• D)Cost effect will lead to a higher quantity of U.S.output demandeD.As the price level falls,interest rates fall,so spending on interest-sensitive items such as cars and plasma TVs increases.Even with a constant quantity of nominal money,interest rates fall because a decrease in the price level causes an increase in the supply of real money in a lending institution.

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Definitions:

Breach of Contract

The act of not executing any part of a contract, be it written or oral, without an acceptable legal excuse.

Contract

A legally binding agreement between two or more parties, which outlines obligations and rights related to a particular arrangement or deal.

Automatic Weaving Machine

A mechanical device that automates the process of weaving textiles, reducing manual labor and increasing production efficiency.

Finance Company

A business that provides loans to individuals or companies, typically specializing in areas such as consumer finance, leasing, and commercial lending.