In the market for money,a rise in the price level causes the demand for money to ________ and the interest rate to ________,everything else held constant.

Question

Quizplus · Accepted Answer

When the price level rises, individuals and businesses need more money to handle their transactions, leading to an increase in the demand for money. As the demand for money increases, the interest rate also increases because the price of borrowing money goes up when more people want to hold money.

In the Market for Money,a Rise in the Price Level