The quantity of aggregate goods and services demanded rises when the
A)price level rises,because the interest rate rises.
B)price level rises,because the interest rate falls.
C)price level falls,because the interest rate rises.
D)price level falls,because the interest rate falls.

Question

Quizplus · Accepted Answer

When the price level falls, the interest rate typically falls as well, making borrowing cheaper and encouraging spending and investment, which increases the quantity of aggregate goods and services demanded.

The Quantity of Aggregate Goods and Services Demanded Rises When