The Real Balances Effect Says That an Increase in the Price

Multiple Choice

The real balances effect says that an increase in the price level

A) Increases the price of U.S.produced goods,causing Americans to buy more imported goods.
B) Increases the price of U.S.produced goods,causing foreign consumers to buy fewer U.S.goods.
C) Increases the need to borrow,which drives up interest rates and reduces loan-financed purchases.
D) Reduces the real value of a fixed amount of savings,consequently reducing the quantity of goods and services purchased.