A rising aggregate price level _____ an economy's interest rates and therefore _____ output demanded.
A) increases; increases
B) increases; reduces
C) reduces; increases
D) reduces; reduces

Question

Quizplus · Accepted Answer

A rising aggregate price level typically leads to higher interest rates, which in turn reduces the output demanded as borrowing costs increase and consumer spending decreases.

A Rising Aggregate Price Level _____ an Economy's Interest Rates