As the price level rises
A)people will want to buy more bonds,so the interest rate rises.
B)people will want to buy fewer bonds,so the interest rate falls.
C)people will want to buy more bonds,so the interest rate falls.
D)people will want to buy fewer bonds,so the interest rate rises.

Question

Quizplus · Accepted Answer

When the price level rises, people's purchasing power decreases, causing them to demand fewer goods and services. As a result, people will also want to buy fewer bonds, driving down bond prices and increasing the interest rate. Therefore, the correct answer is D.

As the Price Level Rises