When the price level increases, people:
A) feel less wealthy.
B) feel wealthier.
C) have the same real value of assets, regardless of the change in the price level.
D) work less.

Question

Quizplus · Accepted Answer

When the price level increases, the nominal value of assets remains the same but their real value decreases, making people feel less wealthy. As a result, they may reduce their spending and investment, leading to reduced economic activity.

When the Price Level Increases, People