When a Change in the Price Level Causes a Change

question 15

Multiple Choice

When a change in the price level causes a change in the purchasing power of currency, which then changes planned real expenditures at all income levels, it is called

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

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Definitions:

Central Nervous System

The part of the nervous system comprising the brain and spinal cord, controlling most functions of the body and mind.

Peripheral

Relating to or situated on the edge or periphery of something, often referring to the outermost areas of the body's nervous system.

Oblongata

Refers to the medulla oblongata, the lower portion of the brainstem controlling autonomic functions.

Arachnoid

A thin, delicate membrane that envelops the brain and spinal cord, part of the meninges.