Assume the Money Market Is Initially in Equilibrium

question 28

Multiple Choice

Assume the money market is initially in equilibrium.If the price level increases,then according to liquidity preference theory there is an excess

• A)supply of money until the interest rate increases.
• B)supply of money until the interest rate decreases.
• C)demand for money until the interest rate increases.
• D)demand for money until the interest rate decreases.

---

Definitions:

Induced

Caused or motivated someone or something to act in a certain way.

Liquidated Damages

are a predetermined form of compensation specified within a contract, payable for a breach of contract, where actual damages are difficult to ascertain.

Unreasonable

Not guided by or based on good sense or logic; excessive or beyond reasonable limits.

Exclusive Personal Services

Contractual agreements where an individual agrees to provide their services exclusively to a single employer or client.