One Explanation for the Inverse Relationship Between the Price Level

question 71

Multiple Choice

One explanation for the inverse relationship between the price level and output,as depicted by a downward-sloping AD curve,is that,other things being held constant,a fall in the price level ___________ the ___________ of people's nominal wealth and so people spend on consumption.This is called the ___________ on spending.

• A) increases;real value;real-balances effect
• B) increases;nominal value;real-balances effect
• C) decreases;real value;real-balances effect
• D) decreases;nominal value;real-balances effect
• E) increases;real value;foreign trade effect

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Definitions:

Social Constructionism

A theory that suggests knowledge and many aspects of the world around us are not inherently objective but constructed through social processes.

Consensual Validation

The process of seeking confirmation from others that one's own perceptions and beliefs are correct.

Group Decision Making

The process where a group of individuals come together to make a decision, often involving discussions, debates, and consensus-building among members.

Semiautonomous Teams

Groups of workers who are given the freedom to manage their own processes and tasks within a project, though under some level of supervision.