If the Price Level Increases,the Value of Money Balances Held

question 63

Multiple Choice

If the price level increases,the value of money balances held by individuals,firms,government,and foreigners decreases,and spending decreases.This is an example of

• A)the open economy effect.
• B)the interest rate effect
• C)the real-balance effect.
• D)the deflation effect.

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Definitions:

Office Building

A structure designed exclusively for commercial, administrative, or professional operations, housing multiple offices.

Adjusting Entry

An accounting entry made in the general ledger at the end of an accounting period to allocate income and expenditure to the correct periods.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to usage, wear and tear, or obsolescence.

Office Equipment

Tangible assets such as desks, computers, and printers used in the operations of an office.