A Reason Why an Increase in the Price Level Decreases

question 262

Multiple Choice

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

• A)the buying power of money increases.
• B)the real interest rate falls.
• C)the price of domestic goods and services increases relative to foreign goods and services.
• D)the inflation rate decreases.
• E)potential GDP decreases.

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Definitions:

Random

Lacking any definite plan or order or purpose; governed by or depending on chance.

Warranted

Justified or supported by reasonable evidence or authority.

Sound

Audible vibrations perceived by the ears or a descriptor for arguments, reasoning, or principles that are based on solid reasoning or evidence.

Valid

Legally sound, officially acceptable, or able to withstand objection or challenge.