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32. The Pigou effect: A) suggests that as prices fall and real money balances rise, consumers should feel less wealthy and spend less. B) suggests

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32. The Pigou effect: A) suggests that as prices fall and real money balances rise, consumers should feel less wealthy and spend less. B) suggests that as prices fall and real money balances rise, consumers should feel wealthier and spend more. C) suggests that as prices fall and real money balances rise, consumers should feel less wealthy but spend more. D) is generally accepted as adequate proof that the economy must be able to correct itself. 33. One explanation for the impact of expected price changes on the level of output is that an increase in expected deflation the nominal interest rate and the real interest rate, so that investment spending declines. A) lowers; raises B) raises; lowers C) raises; raises D) lowers; lowers

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