Suppose That an Increase in the Price Level Reduces the Value

question 29

Multiple Choice

Suppose that an increase in the price level reduces the value of real wealth,which then causes a reduction in consumption but no change in saving.In this case:

• A) there is both an interest rate effect and a wealth effect.
• B) there is no wealth effect.
• C) there is an interest rate effect but no wealth effect.
• D) there is a wealth effect but no interest rate effect.
• E) there is no wealth effect and no interest rate effect.

Understand the principles of perceptual constancy including brightness and size constancy.

Grasp the concept of depth perception and its development from infancy.

Identify the historical perspectives and theories on perception by Kant and Locke.

Recognize the impact of perceived distance on the perceived size and the Moon illusion.

---

Definitions:

Internal Controls

Procedures and policies implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Sarbanes-Oxley Act

A federal law in the United States enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Committee of Sponsoring Organizations

A voluntary private sector organization dedicated to providing guidance on risk management, governance, and internal control frameworks.

Cash Over

A situation where the amount of cash on hand is greater than the expected amount, indicating possible errors or oversight.