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What Is the Difference Between the Real Balances Effect and the Wealth

Question 27

Multiple Choice

What is the difference between the real balances effect and the wealth effect?


A) The former involves income changes while the latter does not.
B) The latter involves income changes while the former does not.
C) The former involves price level changes while the latter involves changes in the value of assets.
D) There is no significant difference.

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