Multiple Choice
Which of the following statements is TRUE about the interest rate effect?
A) The interest rate effect is why the aggregate demand curve is upward sloping.
B) A lower price level lowers the interest rate, which causes businesses and consumers to increase their desired spending.
C) A higher price level lowers the interest rate, which causes business and consumers to increase their desired spending.
D) Expenditures will change as a result of a change in the real value of money balances when there is a change in the price level.
Correct Answer:
Verified
Correct Answer:
Verified
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