When the Price Level Increases People

question 151

Multiple Choice

When the price level increases people:

• A) demand a smaller quantity of goods and services in the aggregate.
• B) feel more wealthy.
• C) have the same real value of assets, regardless of the change in the price level.
• D) want to spend more, but can't due to the prices of all goods and services going up.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specified time in the future.

Spot Price

The present market cost at which an asset can be purchased or sold for instant delivery.

Contract Maturity

The specified date on which the contract expires and the financial transaction must be settled or completed.

Basis

In finance, basis refers to the difference between the spot price of an asset and its future price, or it can signify the foundation or underlying principle for something.