Multiple Choice
According to the intertemporal substitution effect, a fall in the price level will
A) increase the real value of wealth, which raises the interest rate so that the quantity of real GDP demanded decreases.
B) increase net exports, which causes the quantity of real GDP demanded to increase.
C) decrease the real value of wealth, which increases the quantity of real GDP demanded.
D) cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases.
Correct Answer:
Verified
Correct Answer:
Verified
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