As the price level decreases,what is the impact on interest rates and investments?
A)Interest rates and investments both increase.
B)Interest rates and investments both decrease.
C)Interest rates decrease and investments increase.
D)Interest rates increase and investments decrease.

Question

Quizplus · Accepted Answer

When the price level decreases, interest rates tend to decrease due to increased purchasing power of individuals and businesses. This leads to lower borrowing costs and encourages investment. As a result, investments increase. Therefore, the correct choice is C.

As the Price Level Decreases,what Is the Impact on Interest