What will result as part of the interest rate effect when the price level rises?
A)Interest rates will decrease.
B)A lower quantity of real GDP will be demanded.
C)The dollar amount of investment will increase.
D)Money supply will increase.

Question

Quizplus · Accepted Answer

When the price level rises, interest rates tend to increase, leading to a decrease in the quantity of real GDP demanded as borrowing costs rise and consumption and investment decrease.

What Will Result as Part of the Interest Rate Effect