Other things the same,an increase in the price level induces people to hold
A)less money,so they lend less,and the interest rate rises.
B)less money,so they lend more,and the interest rate falls.
C)more money,so they lend more,and the interest rate falls.
D)more money,so they lend less,and the interest rate rises.

Question

Quizplus · Accepted Answer

An increase in the price level leads people to hold more money for transactions, reducing the amount available for lending, which causes the interest rate to rise.

Other Things the Same,an Increase in the Price Level Induces