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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.
Suppose Nigeria has 20 million workers and 16 million units of capital, while Botswana has 5 million workers and 3.5 million units of capital. Which of the following statements is
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