According to the Interest Rate Effect,a Fall in the Price

question 98

Multiple Choice

According to the interest rate effect,a fall in the price level will

• A)decrease the real value of money balances which causes the quantity demanded of aggregate output to increase.
• B)increase lending which causes interest rates to fall,increasing investment spending and increasing the quantity demanded of aggregate output.
• C)lead to a decrease in net exports,which causes the quantity demanded of aggregate output to decrease.
• D)increase the real value of money balances which causes interest rates to increase,reducing the quantity demanded of aggregate output.

---

Definitions:

Properties of Logarithms

The set of rules that apply to logarithmic functions, including product, quotient, and power rules.

Logarithm

The exponent or power to which a base must be raised to produce a given number, commonly used in the operations of multiplication and division in a compressed form.

Change-of-Base Formula

A formula that allows the base of a logarithm to be changed, facilitating easier calculation.

Properties of Logarithms

The properties of logarithms are mathematical rules that apply to logarithmic functions, including product, quotient, and power rules.