Economics

Holding nominal money balances constant, a decrease in the price level

Holding nominal money balances constant, a decrease in the price level A) causes the real value of the money balances to increase, thereby increasing the interest rate. B) generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in total planned real expenditures. C) causes the real […]

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Date: September 2nd, 2020

An indirect effect of an increase in the price level works through A)

An indirect effect of an increase in the price level works through A) changes in trade balances as domestic goods become more expensive, causing interest rates to move in the opposite direction from the change in the exchange rate. B) interest rates as people save more as the higher prices make their money balances less […]

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Date: September 2nd, 2020