Using the Liquidity-Preference Model, When the Federal Reserve Increases the Money

question 69

Multiple Choice

Using the liquidity-preference model, when the Federal Reserve increases the money supply,

• A)the equilibrium interest rate decreases.
• B)the aggregate-demand curve shifts to the left.
• C)the quantity of goods and services demanded is unchanged for a given price level.
• D)the long-run aggregate-supply curve shifts to the right.

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Definitions:

Travertine

A variety of limestone that is commonly concentrically banded and porous.

Karst Topography

A landscape formed from the dissolution of soluble rocks such as limestone, characterized by sinkholes, caves, and underground drainage systems.

Sinkhole

A depression or hole in the ground caused by the collapse of a surface layer, often due to the dissolution of underlying limestone, volcanic activity, or water withdrawal from wells.

Stalactite

A type of speleothem that hangs from the ceiling of limestone caves, formed by the deposition of minerals from dripping water.