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Everything else being the same, what is the effect of an increase in interest rates on...

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Economics

Everything else being the same, what is the effect ofan increase in interest rates on the price level? Discuss theprocess of adjustment to the new equilibrium.

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3.8 Ratings (720 Votes)
A rise in the price level reduces peoples wealth wealth effect the purchasing power of assets owned falls so consumption spending will fall as the price level rises The    See Answer
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