According to Liquidity Preference Theory, If There Were a Shortage

question 229

Multiple Choice

According to liquidity preference theory, if there were a shortage of money, then

• A)the interest rate would be above equilibrium and the quantity of money demanded would be too large for equilibrium.
• B)the interest rate would be above equilibrium and the quantity of money demanded would be too small for equilibrium.
• C)the interest rate would be below equilibrium and the quantity of money demanded would be too small for equilibrium.
• D)the interest rate would be below equilibrium and the quantity of money demanded would be too large for equilibrium.

---

Definitions:

Atomic Components

The smallest, indivisible parts or elements that make up a system, reflecting the concept in both physical science (atoms in matter) and logic (basic propositions).

Symbolic Notation

The use of symbols to represent mathematical operations, quantities, or logical operations.

Atomic Components

The basic, indivisible parts or elements that make up a system or compound.

Symbolic Notation

A system of symbols or codes used to represent specific ideas, quantities, or processes in various fields, such as mathematics or chemistry.