In general, changes in the price level will change the:
A) real value of people's wealth and income.
B) nominal value of cash balances.
C) real value of consumption goods only.
D) nominal value of consumption goods and the real value of durable goods.

Question

Quizplus · Accepted Answer

Changes in the price level affect the purchasing power of people's wealth and income, which is a measure of the real value of these assets. Nominal cash balances and nominal values of consumption goods remain the same with changes in the price level. Only the real value of durable goods may be affected by changes in the price level as their prices increase or decrease in response to supply and demand forces.

In General, Changes in the Price Level Will Change The