The real-balance effect implies that when
A. the price level increases, the value of money balances held by individuals, firms, government, and foreigners decreases and spending decreases.
B. the price level increases, the value of money balances held by individuals, firms, government, and foreigners increases and spending increases.
C. the price level decreases, the value of money balances held by individuals, firms, government, and foreigners decreases and spending decreases.
D. the price level decreases, the value of money balances held by individuals, firms, government, and foreigners increases and spending decreases.
Answer: A
You might also like to view...
To draw the consumption possibilities curve for a particular nation you need to know the output of the good for which the nation has a comparative advantage and the terms of trade
Indicate whether the statement is true or false
What does it mean for an industry to be considered an increasing cost industry?
What will be an ideal response?