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The ______ is when a higher price level reduces the purchasing power of the public's accumulated savings balances. Multiple choice question. international-trade effect real-balances effect price-level effect interest-rate effect

Sagot :

Answer:

Explanation:

Hi

chilljain33

The price-level effect is regarded as a situation in which the purchasing power of the customer of its total accumulated savings balances.

How does price level affect the purchasing power of a person?

Price level refers to an amount for which a certain product is available for sale. It is assumed that the savings of the consumer who is willing to buy does NOT change in the meanwhile.

If the price level of a product decreases, the net disposable income in the hands of a consumer will ultimately increase. Similarly, when the price level is higher, the net disposable income in the hands of the consumer is reduced, leading to a decrease in its purchasing power.

For example, when the savings of a person is 100 and the Product A costs 50 the consumer buys 2 units; When the prices are increased to 100, now the consumer can buy only 1 unit of Product A, indicating a decrease in the purchasing power of the person.

Hence, the price level effect is when the higher price level reduces the purchasing power of the public's savings.

Learn more about purchasing power here:

https://brainly.com/question/24780427

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