Which statement best describes the effects of a fall in the price level?
A) Dollars are worth more, so people spend more.
B) Dollars are worth more, so people spend less.
C) Dollars are worth less, so people spend more.
D) Dollars are worth less, so people spend less.

Question

Quizplus · Accepted Answer

When the price level falls, each dollar can buy more goods and services than before, effectively increasing the purchasing power of money. This encourages people to spend more because they can get more value for their money.

Which Statement Best Describes the Effects of a Fall in the Price