According to the wealth effect, if real wealth decreases then people
A. decrease their consumption expenditure.
B. increase their consumption expenditure.
C. do not respond if their nominal wealth does not change.
D. decrease their consumption expenditure only if their nominal wealth also decreases.
Answer:A
According to the wealth effect, if real wealth decreases then people
A. decrease their consumption expenditure. B. increase their consumption expenditure. C. do not respond if their nominal wealth does not change. D. decrease their consumption expenditure only if their nominal wealth also decreases.