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Why does the price level rise and raise interest rates?
Inflation expectation, money demand growth, liquidity preference theory.

1. Inflation expectation: When the price level rises, people usually expect the future inflation rate to rise. This will lead investors to demand higher interest rates to compensate for the risk of currency depreciation caused by inflation.

2. Increased demand for money: Rising price level means an increase in total social output and consumption level. People need to spend more money to produce or consume goods, so the demand for money will also increase. An increase in money demand will lead to an increase in interest rates.

3. liquidity preference theory: An increase in the price level will lead to an increase in interest rates. The increase of money supply may also make people expect the future price level to be higher, and the expected increase of inflation rate will also increase people's demand for money, which will lead to the increase of interest rates.