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Describe Two Distinct and Opposing Effects That a Fall in Interest

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Essay

Describe two distinct and opposing effects that a fall in interest rates (that are not caused by changes in the price level)could have on the AS/AD model.


Definitions:

Poverty Threshold

The lowest amount of money required to maintain a satisfactory quality of life in a specific country.

Household Size

The number of individuals living in a single domestic unit, whether related by blood, marriage, adoption, or cohabitation.

Cost of Living

Refers to the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time.

Poverty Threshold

The minimum level of income deemed adequate in a particular country, determining who is classified as poor.

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