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

question 152

Multiple Choice

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

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

---

Definitions:

Dual Life Annuity

An insurance product that provides pension benefits to two individuals, usually partners, and continues payments until both have passed away.

Single Life

A term used to describe the status of an individual who is not married or in a legally recognized partnership.

Defined-contribution Plans

Retirement savings plans where the amount contributed is defined, but the benefit received at retirement depends on investment performance.

Retirement Benefits

Payments made in the form of pensions or annuities to individuals who are retired from active work, generally funded through prior employment contributions.