According to the interest rate effect, as the price level rises,:
A) people feel poorer and buy less.
B) United States products become more expensive and foreigners buy less U.S. goods.
C) interest rates fall, and people buy less.
D) interest rates rise, and people buy less.

Question

Quizplus · Accepted Answer

According to the interest rate effect, as the price level rises, interest rates rise, and people buy less because they have less money to spend due to the increased cost of borrowing.

According to the Interest Rate Effect, as the Price Level