According to Liquidity Preference Theory, an Increase in Money Demand

question 202

Multiple Choice

According to liquidity preference theory, an increase in money demand for some reason other than a change in the price level causes

• A)the interest rate to fall, so aggregate demand shifts right.
• B)the interest rate to fall, so aggregate demand shifts left.
• C)the interest rate to rise, so aggregate demand shifts right.
• D)the interest rate to rise, so aggregate demand shifts left.

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus strengthens a behavior or increases its likelihood of being repeated.

Content-Specificity

Distinct cognitive content is related to different types of disorders. For example, depression is related to thoughts of deprivation and loss, whereas anxiety is related to themes of threat and potential harm.

Beck's Theory

A theory developed by Aaron T. Beck that primarily focuses on the role of negative cognitive biases and thoughts in the development and maintenance of depression.

Prevailing Schemas

Dominant cognitive frameworks or beliefs that influence how individuals interpret and respond to information.