According to Liquidity Preference Theory,a Decrease in Money Demand for Some

question 161

Multiple Choice

According to liquidity preference theory,a decrease in money demand for some reason other than a change in the price level causes

• A)the interest rate to fall,so aggregate demand shifts right.
• B)the interest rate to fall,so aggregate demand shifts left.
• C)the interest rate to rise,so aggregate demand shifts right.
• D)the interest rate to rise,so aggregate demand shifts left.

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Definitions:

Venules

Small blood vessels that carry blood from the capillaries towards the veins.

Capillaries

Tiny blood vessels that connect arteries and veins, facilitating the exchange of water, oxygen, carbon dioxide, and many other nutrients and waste substances between blood and tissues.

Mesenteric Vein

A vein that drains blood from the small intestine (and sometimes from the large intestine) into the portal vein of the liver.

Liver

An essential body organ that plays a crucial role in removing toxins, synthesizing proteins, and producing the biochemicals needed for digestion.