When the price level rises,the real interest rate ________ and the quantity of real GDP demanded ________.
A)rises;increases
B)rises;decreases
C)falls;increases
D)falls;decreases
E)does not change;does not change

Question

Quizplus · Accepted Answer

When the price level rises, the demand for goods and services decreases, and therefore the quantity of real GDP demanded decreases. As a result, the demand for money decreases, causing the interest rate to rise. Therefore, the real interest rate rises and the quantity of real GDP demanded decreases.

When the Price Level Rises,the Real Interest Rate ________ and the Quantity