Which of the following best describes how the real balance effect works?
A) The price level falls, purchasing power rises, a person's monetary wealth rises, and the person buys fewer goods and services.
B) The price level rises, purchasing power rises, a person's monetary wealth decreases, and the person buys more goods and services.
C) The price level rises, purchasing power falls, a person's monetary wealth falls, and the person buys fewer goods and services.
D) The price level falls, purchasing power rises, a person's monetary wealth falls, and the person buys fewer goods and services.
E) none of the above
C
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Peanut butter and jelly are complements for many consumers. Consider the market for peanut butter. If there is an increase in the price of jelly,
A) there is a shift in the supply curve for jelly. B) the price of peanut butter rises. C) the quantity of peanut butter increases. D) the demand curve for peanut butter does not shift; instead there is a movement along it. E) there is a movement along the supply curve of peanut butter.
The production possibilities frontier illustrates
a. the constant rate of technological progress. b. the fundamental concept of scarcity. c. the rapid growth of the U.S. economy. d. that guns always trade for butter.