Which of the Following Phrases Best Describes the Wealth Effect

Multiple Choice

Which of the following phrases best describes the wealth effect?

A) When the overall price level increases, ceteris paribus, domestic goods and services become relatively more expensive and foreign goods become relatively cheaper.
B) When income or wealth increase, consumption is likely to decrease.
C) If the price level increases while the nominal money supply remains constant, the supply of real money balances decreases and spending units experience a loss of purchasing power.
D) When the price level rises, the quantity demanded of real GDP must fall in accordance with the constant nominal income constraint. In short, less is demanded at higher prices because the funds run out sooner.