In the Simple Liquidity Preference Model, Changes to the Money

question 86

Multiple Choice

In the simple liquidity preference model, changes to the money supply will have a smaller effect on interest rates when the money demand curve:

• A) is more elastic.
• B) is less elastic
• C) shifts to the right.
• D) is perfectly inelastic.

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Definitions:

Milliliters

A metric system volume unit that equals one thousandth of a liter.

Liters

A unit of volume in the metric system, equivalent to 1,000 cubic centimeters or approximately 0.26 gallons.

Centimeter

A unit of length in the metric system, equivalent to one hundredth of a meter, used commonly to measure small distances.

Inches

A unit of length in the Imperial and United States customary systems, equivalent to 1/12 of a foot.