The Wealth or Real Balances Effect Indicates That

question 95

Multiple Choice

The wealth or real balances effect indicates that

• A)An increase in the price level will increase the demand for money,increase interest rates,and reduce consumption and investment spending
• B)A lower price level will decrease the real value of many financial assets and therefore cause a decline in spending
• C)A higher price level will increase the real value of many financial assets and therefore cause a decline in spending
• D)A higher price level will decrease the real value of many financial assets and therefore cause a decline in spending

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