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Price Point Impact. Even with a linear demand curve, price elasticity for any product. (including tobacco) varies as the price for that product varies. De-. mand tends to be relatively inelastic at lower price levels (due to. smaller income effects), but grows more elastic as price increases.
But if the increase in the supply exceeds the increase in demand, the interest rate falls. Short-Run Effects of Money on Real GDP and the Price Level 15. T Higher interest rates ripple through the econ-omy, affecting many sectors.63 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* Key Concepts The Demand for Money Four factors influence the demand for money: â¦ The price level â An increase in the price level in-creases the nominal demand for money.