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Question
According to the real -balance effect, an increase in the price level will
A) leave total planned real expenditures unchanged since the price level of all goods has increased.
B) decrease total planned real expenditures because of an increase in interest rates.
C) lead to a corresponding increase in total planned real expenditures since businesses are now earning higher profits.
D) decrease total planned real expenditures as a result of a decrease in the real value of money balances.
Answer
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