As the price level increases,what is the impact on interest rates and investments?
A)Interest rates and investment both decrease
B)Interest rates increase and investments decrease.
C)Interest rates and investment both increase.
D)Interest rates decrease and investment increases.

Question

Quizplus · Accepted Answer

As the price level increases, inflationary pressures occur which lead to the central bank raising interest rates to control inflation. This increase in interest rates makes it more expensive for businesses and individuals to borrow money, leading to a decrease in investments.

As the Price Level Increases,what Is the Impact on Interest