Other Things Equal, If the If the Demand for Money

question 4

Multiple Choice

Other things equal, if the if the demand for money becomes more elastic, then the LM Curve will become __________, i.e., a given rise in the interest rate will, in order for Money market equilibrium to be preserved, be associated with a __________ rise in Income.

• A) less elastic; smaller
• B) less elastic; larger
• C) more elastic; smaller
• D) more elastic; larger

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Definitions:

Price Per Share

Price Per Share is the amount of money that each share of a company's stock is worth on the stock market at any given time.

Notes Payable

A written agreement where one party promises to pay another party a specific sum of money on a certain date or on demand.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, typically with fixed dividends.

Common Equity

The percentage of a corporation's equity held by investors in the form of common shares.