Precautionary Demand for Money Will Fall When

question 75

Multiple Choice

Precautionary demand for money will fall when

• A) the interest rate rises.
• B) the interest rate falls.
• C) the money supply increases.
• D) government spending falls.

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Definitions:

Physical Changes

Alterations in the form, appearance, or state of a substance that do not change its chemical composition.

Compulsion

A repetitive and seemingly purposeful behavior performed in response to an obsession or according to rules that must be rigidly followed.

Ritualized Behaviors

Actions performed in a prescribed manner that are often symbolic and are part of a larger cultural or religious practice.

Disaster

A sudden event, such as an accident or a natural catastrophe, that causes great damage or loss of life.