-In the Figure Above,illustrates the Effect of an Increased Rate

question 25

Multiple Choice

-In the figure above,illustrates the effect of an increased rate of money supply growth at time period 0.From the figure,one can conclude that the

• A) liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation.
• B) liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation.
• C) liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation.
• D) liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation.

---

Definitions:

Proportion

The ratio or fraction that represents the part of the whole or a percentage of the total.

Sample

A subset of individuals, items, or data taken from a larger population for the purpose of analysis.

High School Education

A secondary level of formal schooling that follows primary education, typically including grades 9 or 10 through 12, and culminating in a diploma.

Proportion

A statistical measure that reflects the fraction or percentage of the total number of cases that fall within a particular category.