According to the Liquidity Preference Model, If the Interest Rate

question 298

Multiple Choice

According to the liquidity preference model, if the interest rate rises above its equilibrium value, the quantity demanded of nonmonetary interest-bearing financial assets _____, and this leads to a _____ in the interest rate.

• A) decreases; rise
• B) increases; fall
• C) decreases; fall
• D) increases; rise

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Definitions:

Resale Value

The estimated market value of an asset if sold again in the future, often considered for vehicles, electronics, and properties.

Office Furniture

Items intended for use in a work environment, such as desks, chairs, and filing cabinets, to facilitate office operations.

Sum-Of-The-Years-Digits

A depreciation method allocating the cost of an asset over its useful life, with more depreciation in earlier years.

Resale Value

The estimated market value at which an asset or property can be sold in the future.