According to Liquidity Preference Theory

question 15

Multiple Choice

According to liquidity preference theory,

• A)an increase in the interest rate reduces the quantity of money demanded.This is shown as a movement along the curve.An increase in the price level shifts money demand right.
• B)an increase in the interest rate increases the quantity of money demanded.This is shown as a movement along the curve.An increase in the price level shifts money demand left.
• C)an increase in the price level reduces the quantity of money demanded.This is shown as a movement along the curve.An increase in the interest rate shifts money demand right.
• D)an increase in the price level increases the quantity of money demanded.This is shown as a movement along the curve.An increase in the interest rate shifts money demand left.

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Definitions:

Free Cash Flow (FCF)

The amount of cash that a company generates after accounting for capital expenditures needed to maintain or expand its asset base.

Operating Cash Flow

The cash generated by a company's normal business operations, indicating its ability to fund operations, debt, and investments.

Gross Fixed Assets

The total value of a company's physical assets that are used in its operations and not expected to be consumed or converted into cash in the short term.

Current Assets

Assets that a company expects to convert into cash within one year or one business cycle, whichever is longer.