When the general price level in our economy increases, the following effects occur except:
A) The purchasing power of people's savings will increase
B) The interest rate will also tend to increase
C) Foreign buyers will buy less of our output, and we tend to import more
D) Our net exports will tend to decrease

Question

Quizplus · Accepted Answer

When the general price level in the economy increases, the purchasing power of people's savings decreases, not increases. Therefore, A is the only choice that does not occur. B, C, and D are all correct effects of an increase in the general price level.

When the General Price Level in Our Economy Increases, the Following