The change in the quantity of goods and services demanded in the U.S.is based on the logic that as the price level rises,
A)real wealth falls, interest rates rise, and the dollar appreciates.
B)real wealth falls, interest rates rise, and the dollar depreciates.
C)real wealth rises, interest rates fall, and the dollar appreciates.
D)real wealth rises, interest rates fall, and the dollar depreciates.

Question

Quizplus · Accepted Answer

As the price level rises, real wealth falls because the purchasing power of money decreases. Higher price levels can lead to higher interest rates as lenders demand more return to compensate for inflation, and the dollar appreciates as foreign investors seek higher returns in U.S. assets.

The Change in the Quantity of Goods and Services Demanded