If the price level in an economy decreases,other things constant,people consume _____.
A)more because nominal income falls
B)less because nominal income rises
C)more because the real value of their wealth increases
D)less because real income decreases
E)less because the real value of their wealth decreases

Question

Quizplus · Accepted Answer

A decrease in the price level means that each unit of currency can purchase more goods and services, leading to an increase in the real value of people's wealth. As a result, people are likely to consume more since they feel wealthier and can afford more with their existing income.

If the Price Level in an Economy Decreases,other Things Constant,people