Which Statement Best Explains an Increase in Consumer Spending

question 116

Multiple Choice

Which statement best explains an increase in consumer spending?

• A) People spend more when the price level rises because the dollars they hold are worth more.
• B) People spend more when the price level rises because the dollars they hold are worth less.
• C) People spend more when the price level falls because the dollars they hold are worth more.
• D) People spend more when the price level falls because the dollars they hold are worth less.

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Definitions:

Firms' Costs

The expenses incurred by businesses in the production of goods or services, including labor, materials, and overhead costs.

Quantity Supplied

The extent of a good or service that merchants are willing and have the capacity to offer at a pre-determined price.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service suppliers are willing to offer for sale at various prices.

Price of Sugar

The cost at which sugar is sold or bought in the market.