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According to Liquidity-Preference Theory, If the Price Level Increases, How

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According to liquidity-preference theory, if the price level increases, how do the equilibrium interest rate and the aggregate quantity of goods change?


Definitions:

Cognitive Theory

A theory of psychology that emphasizes internal mental processes as the key to understanding human behavior.

Psychosocial Theory

An approach that emphasizes the importance of social relationships and the complexities of mental and emotional development across one's lifespan.

Learning Theory

A body of principles and theories that explain how individuals acquire, process, and retain knowledge or skills.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment, introduced by B.F. Skinner.

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