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.

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Definitions:

External Locus

A belief that one's life outcomes are largely determined by external forces or events rather than one's own efforts.

Mindfulness

The practice of maintaining a nonjudgmental state of heightened or complete awareness of one's thoughts, emotions, or experiences on a moment-to-moment basis.

Tend-And-Befriend Response

A stress response theory that emphasizes a pattern where individuals seek social affiliation and support as a means to cope with stress, contrasting the "fight-or-flight" mechanism.

Fight-Or-Flight

An innate response to a potential damaging situation, aggression, or risk to life preservation.