Increases in the overall price level:
A)reduce people's dollar-denominated wealth.
B)mean that a given number of dollars won't buy as much in terms of real goods and services.
C)mean people will reduce their consumption.
D)All of these are true.

Question

Quizplus · Accepted Answer

When the overall price level increases, it means that the prices of goods and services in the economy have gone up. As a result, people's dollar-denominated wealth is reduced because their money can now buy fewer goods and services. In other words, a given number of dollars won't buy as much in terms of real goods and services. This can make people reduce their consumption since they may not be able to afford as much as they used to. Therefore, all of the choices mentioned in the question are true.

Increases in the Overall Price Level