According to the interest rate effect, as the price level decreases, households and firms' holdings of money ​increases, interest rates ​increase, investments decrease, and the quantity RGDP demanded decreases.
An interest rate effect can be defined as the effect of a decrease or an increase in aggregate demand and Real GDP in an economy, especially as a result of changes in interest rates set by the government of a country.
This ultimately implies that, as the price level decreases, households and business firms' holdings (possession) of money ​increases, interest rates ​increase, investments decrease, and the quantity of Real GDP demanded decreases in accordance with the interest rate effect.
Read more on interest rate effect here: https://brainly.com/question/25379255
#SPJ5
