In Liquidity Preference Theory, an Increase in the Interest Rate

question 125

True/False

In liquidity preference theory, an increase in the interest rate, other things the same, decreases the quantity of money demanded, but does not shift the money demand curve.

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Definitions:

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, essentially the test's ability to detect an effect when there is one.

Null Hypothesis

A hypothesis used in statistical testing that assumes there is no significant difference or effect and that the observed outcomes are due to chance.