If Other Factors Are Held Constant, an Increase in the Price

question 236

Multiple Choice

If other factors are held constant, an increase in the price level

• A) causes desired net export spending to rise.
• B) causes desired net export spending to fall.
• C) causes the real value of the money to increase.
• D) induces people to spend their money faster.

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Definitions:

Inverse Relationship

A situation in which two variables move in opposite directions, meaning that as one variable increases, the other decreases, and vice versa.

Quantity Rises

An increase in the amount or number of a particular good or service that is available or produced.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, commodity, or service.

Price Floor

A government or regulatory imposed minimum price for goods or services, intended to prevent prices from falling too low.