Other things being equal,a fall in the domestic price level leads to a rise in private-sector wealth and thus
A)an increase in the average propensity to save.
B)an increase in autonomous desired consumption.
C)a downward shift in the AE curve.
D)a downward shift in net exports.
E)domestic goods appearing less attractive to foreigners.

Question

Quizplus · Accepted Answer

A fall in the domestic price level increases the real value of money holdings, leading to an increase in private-sector wealth, which can boost autonomous desired consumption.

Other Things Being Equal,a Fall in the Domestic Price Level