As prices fall, the value of people's existing assets rises and people increase expenditures. This occurs as a result of the:
A)international effect.
B)multiplier effect.
C)interest rate effect.
D)money wealth effect.

Question

Quizplus · Accepted Answer

The money wealth effect explains how a decrease in prices increases the real value of money and assets, leading people to feel wealthier and thus more likely to increase their spending.

As Prices Fall, the Value of People's Existing Assets Rises