-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help
A) move the economy to point A.
B) move the economy to point C.
C) move the economy to point D.
D) keep the economy at point B.

Question

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help
A) move the economy to point A. 
B) move the economy to point C. 
C) move the economy to point D. 
D) keep the economy at point B.

Quizplus · Accepted Answer

The wealth effect will increase consumption and thus shift the AD curve to the right, moving the economy to point A.

-In the Above Figure, the Economy Is Initially at Point