A decline in borrower net worth will result in
A)lower output, but a higher price level.
B)a lower price level, but higher output.
C)lower output and a lower price level.
D)higher output and a higher price level.

Question

Quizplus · Accepted Answer

A decline in borrower net worth will lead to a decrease in demand as consumers have less disposable income, leading to a decrease in output. Additionally, decreased demand also leads to a decrease in prices, resulting in a lower price level.

A Decline in Borrower Net Worth Will Result in