In the Keynesian Liquidity Preference Framework,an Increase in the Interest

question 122

Multiple Choice

In the Keynesian liquidity preference framework,an increase in the interest rate causes the demand curve for money to ________,everything else held constant.

• A)shift right
• B)shift left
• C)stay where it is
• D)invert

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Definitions:

Maturity

The date on which the principal amount of a financial instrument is due to be paid back in full.

Non-interest-bearing

Referring to financial instruments or accounts that do not earn interest over time.

Compounded Quarterly

Calculating interest by adding previously earned interest to the principal amount at the end of every quarter, leading to an increase in the interest amount over periods.

Compounded Annually

Interest computed annually on the initial sum as well as on the interest accrued in past periods.