Higher price levels will eventually lead to lower interest rates as people reduce their demand for money.

Question

Quizplus · Accepted Answer

This statement is not necessarily true. Higher price levels, also known as inflation, can lead to higher interest rates as lenders try to compensate for the decrease in purchasing power of their money. Additionally, if inflation is caused by an increase in demand for goods and services, interest rates may remain unchanged or even increase as businesses and individuals borrow more money to finance their activities.

Higher Price Levels Will Eventually Lead to Lower Interest Rates