g Other things the same, a decrease in the price level causes real wealth to a. fall, interest rates to fall, and the dollar to appreciate. b. fall, interest rates to rise, and the dollar to depreciate. c. rise, interest rates to rise, and the dollar to appreciate. d. rise, interest rates to fall, and the dollar to depreciate.

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Business

Chasity

15 April, 22:20

g Other things the same, a decrease in the price level causes real wealth to a. fall, interest rates to fall, and the dollar to appreciate. b. fall, interest rates to rise, and the dollar to depreciate. c. rise, interest rates to rise, and the dollar to appreciate. d. rise, interest rates to fall, and the dollar to depreciate.

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Answer: d. rise, interest rates to fall, and the dollar to depreciate

Explanation:

The price level drops which would make goods and services easier to afford in the country. The proportion of income spent on goods and services will therefore decrease which means more money is available to invest. These investments will increase the Real Wealth of individuals.

However, because there are now a lot of people investing, the sources of capital increases which will reduce the interest rate because the higher the supply, the lower the price.

As a result of the reduced interest rates and assuming this is the United States, people will seek to invest in other countries to get higher interest rates so the dollar will depreciate in value as it is less sought after.