Meaning of real-balances effect
Real-balances effect
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Economics terminology
Glossary of economics terms and concepts
Meaning and definition of real-balances effect
The tendency for increases in the price level to lower the real value (or purchasing power) of financial assets with fixed money value and, as a result, to reduce total spending and real output, and conversely for decreases in the price level.
For the term real-balances effect may also exist other definitions and meanings, the meaning and definition indicated above are indicative not be used for medical and legal or special purposes.
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