Which of the following is incorrect?
A) As the U.S.price level rises, U.S.goods become relatively more expensive so that U.S.exports fall and U.S.imports rise.
B) As the price level falls, the demand for money declines, the interest rate declines, and interest-rate-sensitive spending increases.
C) When the price level increases, real balances increase and businesses and households find themselves wealthier and therefore increase their spending.
D) Given aggregate demand, an increase in aggregate supply increases real output and, assuming downward-flexible prices, reduces the price level.
Correct Answer:
Verified
Q5: The foreign purchases effect suggests that an
Q6: If investment increases by $10 billion and
Q8: The interest-rate effect suggests that
A) a decrease
Q9: The factors that affect the amounts that
Q11: Other things equal, a decrease in the
Q12: An increase in net exports will shift
Q13: If investment decreases by $20 billion and
Q14: The foreign purchases effect suggests that a
Q17: If the price level increases in the
Q18: The real-balances, interest-rate, and foreign purchases effects
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