What Is the Variable That Balances the Money Demand and Supply

question 32

Multiple Choice

What is the variable that balances the money demand and supply in the liquidity-preference and the classical theories?

• A) the interest rate in both theories
• B) the price level in both theories
• C) the interest rate in the liquidity-preference theory and the price level in the classical theory
• D) the price level in the liquidity-preference theory and the interest rate in the classical theory

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Definitions:

Kinds of Validity

The extent to which a test or instrument measures what it is supposed to measure, including content, criterion, and construct validity.

Contrast Examples

The use of opposing or differing instances to illustrate a point, highlight differences, or clarify a concept.

High Validity

A measure of how accurately a test or research measures what it intends to measure.

Low Validity

Refers to the extent to which an instrument, test, or study fails to accurately measure what it is intended to measure.