According to the intertemporal substitution effect, a fall in the price level will
A) decrease the real value of wealth, which increases the quantity of real GDP demanded.
B) cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases.
C) increase net exports, which causes the quantity of real GDP demanded to increase.
D) increase the real value of wealth, which raises the interest rate so that the quantity of real GDP demanded decreases.
B
You might also like to view...
Because resources are limited
A) people must make choices. B) firms will be forced out of business. C) only the very wealthy can get everything they want. D) the availability of goods will be limited but the availability of services will not.
In order for the balance of payments to balance,
a. the current account balance must equal the capital account balance b. international reserves must flow out of the country c. international reserves must flow into the country d. the current account balance plus the capital account balance plus the net flow of international reserves plus the statistical discrepancy must equal zero e. the current account balance plus the capital account balance plus the net flow of international reserves must be greater than the statistical discrepancy