Other Things Equal, an Expected Deflation Can Change Demand By

question 139

Multiple Choice

Other things equal, an expected deflation can change demand by:

• A) lowering the demand for money, thus shifting the LM curve.
• B) increasing the demand for money, thus shifting the LM curve.
• C) raising the real interest rate for any given nominal interest rate, thus reducing desired investment.
• D) lowering the real interest rate for any given nominal interest rate, thus increasing desired investment.

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Definitions:

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