What Does the Real-Balances Effect Refer To

question 175

Multiple Choice

What does the real-balances effect refer to?

• A)The effect that a change in savings has on the real rate of interest.
• B)The level of income where it is exactly equal to the level of consumption.
• C)The effect that a change in interest rates has on the real value of savings.
• D)The effect that a change in the price level has on the real value of wealth.
• E)The effect of a change in consumption on the real value of wealth.

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Definitions:

Anticline

A type of fold in sedimentary strata that appears as an arch-like structure, with the oldest layers at its core.

Strike-Slip Fault

A type of fault where the movement of the Earth's crust is primarily horizontal, parallel to the fault line.

Thrust Fault

A type of fault where rock strata are pushed upwards on one side due to compressional forces.

Normal Fault

A type of fault where the hanging wall slides downward relative to the footwall due to tensile stress in the Earth's crust.