Holding All Other Things Constant, When the Price Level Falls

question 141

Multiple Choice

Holding all other things constant, when the price level falls, interest rates:

• A)​rise and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.
• B)​rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding.
• C)​falls and firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding.
• D)​falls and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.

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