The Interest Rate Effect Is Considered to Have

Multiple Choice

The interest rate effect is considered to have

A) a direct effect because interest rates move in the same direction as changes in quantity demanded.
B) a direct effect because increases in the price level lead to increases in interest rates.
C) an indirect effect because price level increases cause borrowing to increase,which raises interest rates and reduces quantity demanded for goods and services.
D) an indirect effect because higher prices lead to lower interest rates.