Author Question: The real-balance effect indicates that at higher price levels A) the real value of money holdings ... (Read 55 times)

jjjetplane · **on:** Jun 30, 2018

The real-balance effect indicates that at higher price levels

A) the real value of money holdings increase, resulting in increased saving.
B) the purchasing power of money will increase.
C) the real value of money holdings fall, resulting in decreased spending.
D) the value of the dollar will increase.

Question 2

The marginal propensity to consume (MPC)

A) shows the percentage of real disposable income consumed at each level of income.
B) shows how much of an extra dollar of real disposable income is spent.
C) shows how much real disposable income changes when consumption falls.
D) is greater than 1 only if the marginal propensity to save is greater than 1.