When the price level decreases:
A. The demand for money falls and the interest rate falls
B. Holders of financial assets with fixed money values decrease their spending
C. Holders of financial assets with fixed money values have less purchasing power
D. There is a decrease in consumer spending that is sensitive to changes in interest rates
A. The demand for money falls and the interest rate falls
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Higher unemployment benefits funded by higher taxes on earnings would: a. decrease aggregate supply in an economy. b. increase the supply of labor in an economy. c. increase the price level in an economy
d. decrease aggregate demand in an economy. e. increase the opportunity cost of leisure.
If your bank faces a 20 percent required reserve ratio and receives a cash deposit of $4,000 into a checkable deposit account, the maximum total amount of money possible after the banking system makes all loans is:
a. $800. b. $3,200. c. $4,000. d. $16,000. e. $20,000.