When the price level decreases,
A)the demand for money falls and the interest rate falls.
B)holders of financial assets with fixed money values decrease their spending.
C)holders of financial assets with fixed money values have less purchasing power.
D)there is a decrease in consumer spending that is sensitive to changes in interest rates.

Question

Quizplus · Accepted Answer

When the price level decreases, the demand for money falls because people need less money for transactions, leading to a decrease in interest rates.

When the Price Level Decreases