If the price level increases,other things constant,consumption spending
A)increases because real income rises
B)decreases because real income rises
C)increases because the real value of wealth increases
D)decreases because the real value of wealth decreases
E)increases because nominal income increases

Question

Quizplus · Accepted Answer

When the price level increases, the real value of wealth decreases, which means that people's purchasing power decreases. This, in turn, decreases consumption spending.

If the Price Level Increases,other Things Constant,consumption Spending