Other things the same,when the price level rises,interest rates
A)rise,which means consumers will want to spend more on homebuilding.
B)rise,which means consumers will want to spend less on homebuilding.
C)fall,which means consumers will want to spend more on homebuilding.
D)fall,which means consumers will want to spend less on homebuilding.

Question

Quizplus · Accepted Answer

When the price level rises, it increases inflation. This leads the central bank to increase interest rates to curb inflation. Higher interest rates mean that borrowing becomes more expensive, which reduces consumer spending on big-ticket items like homebuilding. Therefore, consumers will want to spend less on homebuilding.

Other Things the Same,when the Price Level Rises,interest Rates