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The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction...

The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment

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Answer #1

The interest rate effect describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment.

Interest-Rate Effect is defined as the tendency for increases in the price level to lower the real value (or purchasing power) of financial assets with fixed money value and, as a result, to reduce total spending and real output, and conversely for decreases in the price level.

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