When the price level falls
A)households want to lend more,so the interest rate rises making the quantity of goods and services demanded rise.
B)households want to lend more,so the interest rate falls,making the quantity of goods and services demanded rise.
C)households want to lend more,so the interest rate rises,making the quantity of goods and services demanded fall.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

When the price level falls, households have more real wealth and want to lend more, which lowers the interest rate and increases the quantity of goods and services demanded.

When the Price Level Falls