Question

wealth effect: a decrease in the price level ______ the real value of money and makes consumers _______, which encourages them to spend _______, this _______ in consumer spending means a ________ quantity of goods and services demanded

Answer 1

The wealth effect is an economic concept that explains how changes in the price level affect consumer spending.

Step-by-step explanation:

The wealth effect is an economic concept that explains how changes in the price level affect consumer spending. When the price level decreases, it increases the real value of money, making consumers feel wealthier. This encourages them to spend more, leading to an increase in consumer spending. As a result, there is a greater demand for goods and services.