According to the Theory of Liquidity Preference, If Output Increases

question 169

Multiple Choice

According to the theory of liquidity preference, if output increases

• A)people want to hold more money. This response is shown as a movement along the money demand curve.
• B)people want to hold more money. This response is shown as a shift of the money demand curve.
• C)people want to hold less money. This response is shown as a movement along the money demand curve.
• D)people want to hold less money. This response is shown as a shift of the money demand curve.

Discriminate between different types of risk premiums (default, maturity, liquidity) and their impact on interest rates.

Recognize the theories explaining the term structure of interest rates (expectations theory, liquidity preference theory, market segmentation theory).

Calculate the impact of inflation on interest rates and understand inflation adjustment in interest rate calculations.

Understand how the financial markets facilitate the flow of money between the consumption and production sectors.

---

Definitions:

Secondary

Refers to the output side of a transformer or the secondary winding where the transformed or induced voltage is produced.

Tertiary

Referring to the third level or stage in a sequence, system, or hierarchy.

Tapped

In electrical engineering, refers to creating a connection point at some location along a wire or winding of a transformer to draw off voltage.

Autotransformer

A type of electrical transformer with a single winding that acts as both the primary and the secondary winding, used for varying the level of voltage.