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Question
Holding nominal money balances constant, a decrease in the price level
A) causes the real value of the money balances to increase, in turn increasing total planned real expenditures.
B) causes the real value of the money balances to decrease, in turn decreasing total planned real expenditures.
C) causes the real value of the money balances to increase, thereby increasing the interest rate.
D) generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in total planned real expenditures.
Answer
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