If the Demand Function for Money Is M / P

question 33

Multiple Choice

If the demand function for money is M / P = 0.2Y - 200r, and if M / P increases by 100, then the LM curve for any given interest rate shifts to the:

• A)left by 100.
• B)left by 500.
• C)right by 100.
• D)right by 500.

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Definitions:

Psychology

The systematic investigation of mental activities and behaviors.

Cognitive Approach

An approach to psychology emphasizing the mental processes involved in knowing: how we direct our attention, perceive, remember, think, and solve problems.

Behavioral Approach

A psychological perspective emphasizing the study of observable behaviors and the effects of learning on behavior.

Psychology

An exploration of the workings of the human mind and its capabilities, with a strong emphasis on how these affect actions in particular environments.