A Rise in the Price Level Will Have a Direct

question 44

Multiple Choice

A rise in the price level will have a direct effect on spending because

• A)people like to spend more when prices are higher.
• B)the real value of the money people have varies directly with the price level,and so does their spending.
• C)the real value of the money people have decreases and they can buy less with it.
• D)the more money they have the more it is worth and the more goods and services they can buy.

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to interest rate changes, representing the weighted average time until all cash flows are received.

Yield-To-Maturity

The expected total yield on a bond when held to its maturity date, stated as a yearly percentage.

Coupon Rate

The interest paid annually on a bond, indicated as a percentage of its face value.

Annually

Occurring once every year, often used to describe events or measurements that are taken or occur once per year.