Question

When the price level decreases, _____. rev: 06_12_2018 Multiple Choice the demand for money falls and the interest rate falls holders of financial assets with fixed money values decrease their spending holders of financial assets with fixed money values have less purchasing power there is a decrease in consumer spending that is sensitive to changes in interest rates

Answer 1

Answer:

The demand for money falls and the interest rate falls.

Explanation:

Price level can be described as the evaluation of the amount in which goods and services are sold in the market. A change in the price level can greatly affect the demand of a customer either positively or negatively.

A decrease in the price level enables a customer to purchase more products and at the same time save some amount of money, this results in the reduction of interest rates.

When the price level reduces, individuals will need less amount of money to buy the same quantity and type of product.