If some of a person's wealth is in cash,it follows that
A) this person's monetary wealth will change as the price level changes.
B) this person's monetary wealth will not change as the price level changes.
C) this person is wealthier than a person who holds all his wealth in nonmonetary form.
D) a and c
E) b and c

Question

Quizplus · Accepted Answer

Cash holdings are part of a person's monetary wealth, which is directly affected by changes in the price level. As prices rise, the purchasing power of cash decreases, and as prices fall, the purchasing power of cash increases. Therefore, a person's wealth in cash will change in line with changes in the price level, making choice A the best answer.

If Some of a Person's Wealth Is in Cash,it Follows