The Idea That a Decrease in the Price Level Raises

question 198

Multiple Choice

The idea that a decrease in the price level raises the real value of households' money holdings,which increases consumer spending and the quantity of goods and services demanded is known as

• A)the interest-rate effect.
• B)the exchange-rate effect.
• C)the theory of liquidity preference.
• D)the wealth effect.

---

Definitions:

FMV

Fair Market Value; the price an asset would sell for on the open market under current conditions.

Donor's Adjusted Basis

The amount used in determining capital gain or loss for the donor, typically the cost basis adjusted for various factors like improvements or depreciation.

Ordinary Gains

Ordinary gains refer to earnings from the sale of assets or property that are not classified under capital gains and are subject to the taxpayer's normal income tax rate.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.