Multiple Choice
The real-balance effect pertains to the effect of
A) consumer spending on the price level, while the wealth effect refers to the impact of changes in wealth on consumer spending.
B) wealth changes on aggregate demand, while the wealth effect refers to the impact of changes in the price level on the real value of wealth.
C) changes in interest rate on aggregate demand, while the wealth effect refers to the impact of changes aggregate demand on people's wealth.
D) price changes on aggregate demand, while the wealth effect refers to the impact of changes in wealth on aggregate demand.
Correct Answer:
Verified
Correct Answer:
Verified
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