Final answer:
An increase in the price level with an unchanged money supply will result in higher interest rates. A rise in the supply of money, on the other hand, will lead to a decline in interest rates in the financial market.
Step-by-step explanation:
When the price level in an economy rises and the supply of money remains unchanged, there will generally be an increase in interest rates. This is because higher prices typically lead to greater demand for money as businesses and consumers need more money to transact. If the money supply doesn't grow to meet this higher demand, the cost of borrowing money, which is reflected in the interest rates, will rise.
As for the decline in interest rates in the financial market, it is most directly related to a rise in the supply of money. When banks have more money to lend, the price of borrowing (interest rates) goes down due to increased supply. Conversely, a rise in demand would likely increase interest rates, as would a fall in supply. Therefore, the correct answer is that a rise in supply will lead to a decline in interest rates.