Study Tools ns cess Tips ess Tips OR YOU Learn Every dback PRICE LEVEL 150 140 130 120 110 100 90 0 I 100 Y 200 AD 400 500 600 300 OUTPUT (Billions of dollars) 700 As the price level falls, the cost of borrowing money will rise . This phenomenon is known as the Additionally, as the price level falls, the impact on the domes markets. The number of domestic products purchased by for products purchased by domestic consumers and firms (impor causing the quantity of domestic output demanded to 800 fall exchange rate interest rate wealth , causing the quantity of output demanded to effect. ill cause the real value of the dollar to will therefore in foreign exchange and the number of foreign . Net exports will therefore This phenomenon is known as the Grade It Now effect. Save & Continue Continue without saving