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Which of the following is the best example of the wealth effect theory in macroeconomics?


The price level increases, so suppliers feel wealthier and therefore increase hiring with the result of increased aggregate demand.


The price level decreases, therefore real wages decrease for demanders thereby triggering a decrease in aggregate demand.


The price level decreases, so demanders increase consumption thereby increasing aggregate supply.


The price level increases, thereby making demanders feel poorer so they decrease demand for output.


The price level decreases, thereby allowing suppliers to increase employment because labor is more prepared to accept lower wages and salaries due to the lower cost of living.

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