The Real-Balances Effect Suggests That A

Multiple Choice

The real-balances effect suggests that a:

A) lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending.
B) lower price level will decrease the real value of many financial assets and therefore cause an increase in spending.
C) lower price level will increase the real value of many financial assets and therefore cause an increase in spending.
D) higher price level will increase the real value of many financial assets and therefore cause an increase in spending.