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Question
The real-balance effect implies that when
A) the price level decreases, the value of money balances held by individuals, firms, government, and foreigners increases and spending decreases.
B) the price level increases, the value of money balances held by individuals, firms, government, and foreigners increases and spending increases.
C) the price level increases, the value of money balances held by individuals, firms, government, and foreigners decreases and spending decreases.
D) the price level decreases, the value of money balances held by individuals, firms, government, and foreigners decreases and spending decreases.
Answer
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