An individual holds $10,000 in a checking account and the price level rises significantly.Hence
A) the individual's real wealth and consumption expenditure decrease.
B) the individual's real wealth decreases but real national wealth increases.
C) there is no change in the individual's real wealth.
D) the individual's wealth increases.

Question

Quizplus · Accepted Answer

When the price level rises significantly, the individual's purchasing power decreases, causing their real wealth to decrease. This, in turn, reduces their consumption expenditure. Therefore, the best choice is A.

An Individual Holds $10,000 in a Checking Account and the Price