Other things the same,an increase in the price level makes the dollars people hold worth
A)more, so they spend more.
B)more, so they spend less.
C)less, so they spend more.
D)less, so they spend less.

Question

Quizplus · Accepted Answer

An increase in the price level makes the purchasing power of a dollar decrease. Therefore, people are less likely to spend more as the value of their money is now reduced. This is consistent with the concept of inflation, where the general price level of goods and services in an economy increases. Hence, the correct choice is D, i.e., less, so they spend less.

Other Things the Same,an Increase in the Price Level Makes