The Wealth Effect Says That If There Is an Increase

question 17

Multiple Choice

The wealth effect says that if there is an increase in the price level, you will:

• A) experience some reduction in your level of wealth as a result.
• B) experience some increase in your level of wealth as a result.
• C) typically spend more on all goods and services as a result.
• D) typically shift your spending to assets from consumption goods.

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Definitions:

Promissory Estoppel

Promissory estoppel is a legal doctrine that can enforce a promise in the absence of a formal contract when a party has relied on that promise to their detriment.

Consideration

Something of value that is exchanged between parties in a contract, making the agreement legally binding.

Preexisting Contract

A legal agreement that was created and became effective before the current discussion or issue.

Additional Consideration

Extra benefits or compensation provided to one party in a contract to modify or amend the original terms.