Suppose the price level increases.What will be the likely effect on dollar-denominated assets?
A) The real value of dollar-denominated assets will fall.
B) The real value of dollar-denominated assets will rise.
C) The real value of dollar-denominated assets will remain the same.
D) The real value of dollar-denominated assets will become negative.

Question

Suppose the price level increases.What will be the likely effect on dollar-denominated assets?  
A) The real value of dollar-denominated assets will fall. 
B) The real value of dollar-denominated assets will rise. 
C) The real value of dollar-denominated assets will remain the same. 
D) The real value of dollar-denominated assets will become negative.

Quizplus · Accepted Answer

When the price level increases, the real value of dollar-denominated assets will fall as their purchasing power decreases. For example, if the price level increases by 10%, then a dollar can buy 10% fewer goods and services, which means the real value of dollar-denominated assets is reduced.

Suppose the Price Level Increases