The change in ________ brought about by a change in real wealth that results from a change in the ________ is the real wealth effect.
A) the money supply; money demand
B) taxes; interest rate
C) consumption; price level
D) aggregate output; level of investment

Question

Quizplus · Accepted Answer

The real wealth effect occurs when there is a change in real wealth due to a change in prices, which in turn affects consumption. Therefore, the correct choices are consumption and price level. The other options, such as the money supply and taxes, are not directly related to the real wealth effect.

The Change in ________ Brought About by a Change in Real