Holding Nominal Money Balances Constant, a Decrease in the Price

question 33

Multiple Choice

Holding nominal money balances constant, a decrease in the price level

• A) causes the real value of the money balances to increase, in turn increasing total planned real expenditures.
• B) causes the real value of the money balances to decrease, in turn decreasing total planned real expenditures.
• C) causes the real value of the money balances to increase, thereby increasing the interest rate.
• D) generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in total planned real expenditures.

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