According to Keynes's Liquidity Preference Theory of the Demand for Money

question 57

Multiple Choice

According to Keynes's liquidity preference theory of the demand for money, the demand for money will

• A)increase when output increases, but decrease when the interest rate increases.
• B)decrease when output increases, but increase when the interest rate increases.
• C)increase when output or the interest rate increases.
• D)decrease when output or the interest rate increases.

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Definitions:

Real Numbers

All the numbers on the number line, including rational and irrational numbers, but not imaginary numbers.

Radical Expression

An expression that includes a radical symbol, which indicates the root of a number.

Simplify

The process of making an expression or equation easier to work with, by reducing it to its most basic form.

Absolute Value

The distance of a number from zero on the real number line, disregarding whether it is positive or negative.