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Question
What is one implication of the real-balance effect?
A) The part of your wealth that you hold in the form of cash loses some of its value as the
price level rises.
B) When the price level rises, people have an incentive to work harder in order to earn a higher income.
C) When the price level falls, most consumers reallocate their spending so as to have an equal balance between necessities and luxuries.
D) Aggregate demand and aggregate supply can never reach long -run equilibrium.
Answer
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Related questions
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