Suppose total planned expenditures equal $14.4 trillion when the value of the price level is 95. If the price level dropped to 90, total planned real expenditures will equal
A) less than $14.4 trillion but more than $1 trillion.
B) less than $14.4 trillion.
C) more than $14.4 trillion.
D) $14.4 trillion.

Question

Quizplus · Accepted Answer

When the price level drops, the real value of money increases, leading to an increase in total planned real expenditures as consumers and businesses are able to purchase more goods and services with the same amount of money.

Suppose Total Planned Expenditures Equal $14