Quizzol

QUESTION:

According to the wealth effect, aggregate demand slopes downward because _______.

a. lower prices increase the value of money holdings and consumer spending increases

b. lower prices decrease the value of money holdings and consumer spending decreases

c. lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases

d. lower prices increase money holdings, decrease lending, interest rates rise, and investment spending falls

ANSWER:

a. lower prices increase the value of money holdings and consumer spending increases

Posted by Cleveland on September 10, 2024