An Individual Holds $20 000 in an Interest-Earning Checking Account

question 35

Multiple Choice

An individual holds $20 000 in an interest-earning checking account earning 10% interest,and the overall price level rises by 12%.Other things constant,we would expect

• A)the individual's real wealth to decrease and consumption to diminish.
• B)the individual's stock of real wealth to decrease but real national income to increase.
• C)no change in the individual's real wealth but a decline in real national product.
• D)real wealth has gone down by 12%.

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Definitions:

Alphabet

A set of letters or symbols in a fixed order used to represent the basic sounds of a language, particularly for writing.

Mnemonic Devices

Techniques a person can use to help them improve their ability to remember something, often by associating patterns, such as letters or associations, with the information being memorized.

Procedural Memory

The type of long-term memory responsible for knowing how to do things, also known as muscle memory.

Declarative Memory

The type of long-term memory that involves conscious recollection of facts and events.