According to the theory of liquidity preference,
A) an increase in the interest rate reduces the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the price level shifts money demand to the right.
B) an increase in the interest rate increases the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the price level shifts money demand leftward.
C) an increase in the price level reduces the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the interest rate shifts money demand rightward.
D) an increase in the price level increases the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the interest rate shifts money demand leftward.
Correct Answer:
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Q130: Liquidity preference theory is most relevant to
Q131: Figure 34-2
(a) The Money Market
(b) The Aggregate
Q132: Monetary policy
A)must be described in terms of
Q133: Figure 34-2
(a) The Money Market
(b) The Aggregate
Q134: Figure 34-3
(a) The Money Market
(b) The Aggregate
Q136: While a television news reporter might state
Q137: If expected inflation is constant and the
Q138: According to liquidity preference theory, the money-supply
Q139: Figure 34-1 Q140: According to liquidity preference theory, if there
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