According to the wealth effect, an increase in the price level real wealth and _ consumption expenditure.
A) increases; increases
B) decreases; increases
C) decreases; decreases
D) increases; decreases

Question

Quizplus · Accepted Answer

The wealth effect suggests that when the price level increases, the real value of wealth decreases, leading to a decrease in consumption expenditure.

According to the Wealth Effect, an Increase in the Price