According to the "wealth effect," when the ________ falls,the ________ rises.
A)inflation rate; nominal value of household assets
B)unemployment rate; average level of household income
C)price level; the nominal value of household wealth
D)price level; the real value of household wealth

Question

Quizplus · Accepted Answer

The "wealth effect" refers to the change in consumer spending brought on by perceived changes in wealth, often due to changes in the price level. When the price level falls, the real value of household wealth increases because the purchasing power of the wealth is higher, encouraging increased spending.

According to the "Wealth Effect," When the ________ Falls,the ________

According to the "Wealth Effect," When the Falls,the