What Does the Real-Balances Effect Mean

Multiple Choice

What does the real-balances effect mean?

A) A higher price level will lead to an increase in the rate of interest,thereby causing a decrease in consumption.
B) A lower price level will lead to an increase in the rate of interest,thereby causing a decrease in consumption.
C) A higher price will increase the real value of financial assets,thereby causing an increase in consumption.
D) A higher price will decrease the real value of financial assets,thereby causing an increase in consumption.
E) A higher price will decrease the real value of financial assets,thereby causing a decrease in consumption.