Answered

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What is the relationship between interest rate, aggregate income, and price level?.

Sagot :

A decrease in income will lead to a decrease in price level and a decrease in the interest rate.

What is the relationship between these variables?

When income declines, there would a decrease in demand and this would lead to a decline in price levels. When price levels fall, interest rate also decline. Thus, there is a positive relationship between these variables.

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