When the price level falls:
A)households try to increase their holdings of money
B)households try to reduce their holdings of money
C)households don't change their holdings of money
D)none of the above

Question

Quizplus · Accepted Answer

When the price level falls, the real value of money increases, meaning each unit of currency can buy more goods and services than before. As a result, households may try to reduce their holdings of money because they need less money to buy the same amount of goods and services, or they might invest the excess money in other assets.

When the Price Level Falls