The Theory of Liquidity Preference Illustrates the Principle That

question 91

Multiple Choice

The theory of liquidity preference illustrates the principle that

• A)monetary policy can be described either in terms of the money supply or in terms of the interest rate.
• B)monetary policy can be described either in terms of the exchange rate or the interest rate.
• C)monetary policy must be described in terms of the money supply.
• D)monetary policy must be described in terms of the interest rate.

---

Definitions:

Latency Stage

In psychoanalytic theory, a period in childhood development characterized by a suppression of sexual impulses and a focus on expanding social contacts beyond the family.

Biological Urges

Innate drives or impulses stemming from biological needs that influence human behavior, such as hunger, thirst, and sexual desire.

Social Contacts

Interactions and connections with other people, ranging from casual acquaintances to close personal relationships.

Psychosexual Development

Freud's theory describing how personality develops through five stages (oral, anal, phallic, latency, genital) from infancy to adulthood.