An Increase in the Price Level Will

question 169

Multiple Choice

An increase in the price level will

• A)increase consumption because goods are more expensive
• B)make the consumption function steeper
• C)increase consumption because wages will increase
• D)decrease consumption because falling interest rates make it cheaper to borrow
• E)decrease consumption because the value of net wealth has decreased

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Definitions:

Gasoline

A petroleum-derived flammable liquid primarily used as fuel in internal combustion engines.

Tax Per Unit

A levy imposed by a government on each unit of goods or services sold.

Buyers

Individuals or entities that purchase goods or services from the market for consumption or use.

Tax

Mandatory financial charges imposed by a government on individuals, corporations, or additional legal entities to fund public expenditures.