How Does the Interest Rate Change When the Price Level

question 7

Multiple Choice

How does the interest rate change when the price level falls and when the money supply falls?

• A) The interest rate rises both when the price level falls and when the money supply falls.
• B) The interest rate rises when the price level falls and falls when the money supply falls.
• C) The interest rate falls when the price level falls and rises when the money supply falls.
• D) The interest rate falls both when the price level falls and when the money supply falls.

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