Which statement best explains an increase in consumer spending?
A) People spend more when the price level rises because the dollars they hold are worth more.
B) People spend more when the price level rises because the dollars they hold are worth less.
C) People spend more when the price level falls because the dollars they hold are worth more.
D) People spend more when the price level falls because the dollars they hold are worth less.

Question

Quizplus · Accepted Answer

When the price level falls, the purchasing power of money increases, meaning consumers can buy more with the same amount of money, which often leads to an increase in consumer spending.

Which Statement Best Explains an Increase in Consumer Spending