A rise in the price level will have a direct effect on spending because
A)people like to spend more when prices are higher.
B)the real value of the money people have varies directly with the price level,and so does their spending.
C)the real value of the money people have decreases and they can buy less with it.
D)the more money they have the more it is worth and the more goods and services they can buy.

Question

Quizplus · Accepted Answer

A rise in the price level reduces the purchasing power of money, which means that people can buy fewer goods and services with the same amount of money. As a result, people's spending is directly affected by the price level.

A Rise in the Price Level Will Have a Direct