Question

interest rate effect: a lower price level ____ the interest rate, wich encourages ______ spending on investment goods, and ________ the quantity of goods and services demanded

Answer 1

The interest rate effect is a concept in economics that explores the relationship between changes in the price level, interest rates, and investment spending.

Step-by-step explanation:

The interest rate effect is a concept in economics that explores the relationship between changes in the price level, interest rates, and investment spending. When the price level decreases, it lowers the interest rate. This lower interest rate encourages increased spending on investment goods and stimulates the demand for goods and services. As a result, the quantity of goods and services demanded increases.