According to the interest-rate effect,if the price level falls then people will need to borrow fewer dollars,which will cause the interest rate to decrease and loan financed sales will increase.

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According to the interest-rate effect, a decrease in the price level will lead to a decrease in the demand for money, as people will need to borrow fewer dollars. This will cause the interest rate to decrease, which in turn will increase investment spending and loan-financed sales, thus stimulating the economy.

According to the Interest-Rate Effect,if the Price Level Falls Then