The Interest Rate Effect Indicates That A(n)

question 78

Multiple Choice

The interest rate effect indicates that a(n) :

• A)decrease in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.
• B)decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending.
• C)increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending.
• D)increase in the supply of money will increase interest rates and decrease interest-sensitive consumption and investment spending.

---

Definitions:

Veto Power

The authority to reject or block a decision, proposal, or law, often held by an executive branch over legislative actions.

Legislative Branch

The part of government responsible for making laws, consisting of legislatures or parliaments.

Contract Clause

The clause in the U.S. Constitution that prohibits the government from unreasonably interfering with an existing contract.

United States Constitution

The supreme law of the United States, establishing the framework of the national government and defining the rights of citizens.