The _____ Effect States That a Lower Price Level Reduces

question 10

Short Answer

The _____ effect states that a lower price level reduces the amount of money people wish to hold. When they lend out their excess savings, the _____ falls causing investment spending to rise and increases the quantity of goods and services demanded.

---

Definitions:

Hypothalamus

A small but crucial part of the brain involved in many functions, including hormone release, regulation of body temperature, and hunger control.

Physical Needs

Basic requirements for human survival, such as food, water, shelter, and sleep.

Hyperphagic

Characterized by excessive eating.

Aphagic

Characterized by undereating.