If the price level falls, then
A)the interest rate falls and spending on goods and services falls.
B)the interest rate falls and spending on goods and services rises.
C)the interest rate rises and spending on goods and services falls.
D)the interest rate rises and spending on goods and services rises.

Question

Quizplus · Accepted Answer

When the price level falls, the interest rate typically falls, which encourages more spending on goods and services due to cheaper borrowing costs.

If the Price Level Falls, Then