Economics · Macroeconomics
In Patinkin's real balance effect (Pigou effect), a fall in the price level increases real wealth, which then increases:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Savings and reduces consumption
- 2Consumption, shifting IS rightward✓
- 3Speculative demand for money
- 4Investment via lower real interest rates
Correct answer
Consumption, shifting IS rightward
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