Over What Period of Time Is the Liquidity-Preference Theory Most

question 54

Multiple Choice

Over what period of time is the liquidity-preference theory most relevant, and what does it suppose?

• A) short run; it supposes that the price level adjusts to bring money supply and money demand into balance
• B) short run; it supposes that the interest rate adjusts to bring money supply and money demand into balance
• C) long run; it supposes that the price level adjusts to bring money supply and money demand into balance
• D) long run; it supposes that the interest rate adjusts to bring money supply and money demand into balance

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