An increase in the price level results in a(n)________ in household consumption spending and
A(n)________ in investment spending.
A)increase; decrease
B)increase; increase
C)decrease; decrease
D)decrease; increase

Question

Quizplus · Accepted Answer

An increase in the price level typically leads to a decrease in household consumption spending because goods and services become more expensive, reducing the purchasing power of consumers. Similarly, investment spending decreases because the cost of borrowing money for investments is likely to increase, making investments less attractive.

An Increase in the Price Level Results in A(n)________ in Household