According to Keynes, when the price level rises, it causes the interest rate to do what? It causes the level of business spending to do what?
A) It causes an increase in the interest rate, due to a greater consumer demand for money to spend; business spending decreases.
B) It causes an increase in the interest rate, due to greater consumer demand for money to spend; business spending goes up as well.
C) It causes a decrease in the interest rate, as people adjust to higher prices and purchase less; business spending decreases as well.
D) It causes a decrease in the interest rate, as people adjust to higher prices and purchase less; business spending goes up.
Correct Answer:
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