The following table is for a particular country in which C is consumption expenditures, I_g is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars. Refer to the above table.The interest rate effect of changes in the price level is shown by columns: A)(1) and (4) of the table. B)(5) and (6) of the table. C)(1) and (3) of the table. D)(2) and (4) of the table.

Question

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The interest rate effect of changes in the price level is shown by columns (1) and (3) of the table. This is because changes in the price level affect the demand for money, leading to changes in interest rates. Column (1) shows the effect of a decrease in the price level on real money balances, which increases the demand for money and leads to an increase in the interest rate. Column (3) shows the effect of an increase in the price level on real money balances, which decreases the demand for money and leads to a decrease in the interest rate.

The Following Table Is for a Particular Country in Which