The following factors explain the inverse relationship between the price level and the total demand for output, except
A) a substitution effect.
B) a real-balances effect.
C) an interest-rate effect.
D) a foreign-purchases effect.

Question

Quizplus · Accepted Answer

The substitution effect does not explain the inverse relationship between the price level and the total demand for output; it relates to how consumers may substitute between different goods as their relative prices change, not to the overall demand for output in relation to price levels.

The Following Factors Explain the Inverse Relationship Between the Price