The interest rate effect shows that if the price level increases
A. consumers and businesses will borrow more to replenish their real money balances, which pushes up interest rates and causes spending to decrease.
B. U.S. exports and imports will both decrease.
C. consumers and businesses will increase their spending to buy the same amount of goods as before to make up for the higher interest rates.
D. the real value of financial assets will increase.
Answer: A
Economics
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