Which of the Following Is an Example of the Real

Multiple Choice

Which of the following is an example of the real balances effect,assuming the U.S.price level decreases?

A) The purchasing power of money increases and people buy more goods.
B) U.S.goods are less expensive for foreigners to buy and exports increase.
C) U.S.production costs stay constant and profits for businesses decrease.
D) The demand for loans decreases so interest rates decline and loan-financed purchases increase.