According to Liquidity-Preference Theory, What Action Taken by the Bank

question 24

Multiple Choice

According to liquidity-preference theory, what action taken by the Bank of Canada would shift the money-supply curve?

• A) if the Bank of Canada engaged in arbitrage
• B) if the Bank of Canada changed the inflation rate
• C) if the Bank of Canada changed the exchange rate
• D) if the Bank of Canada engaged in open-market transactions

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Definitions:

Market Value

The present cost at which a service or asset is available for purchase or sale in the market.

MACRS Depreciation

The Modified Accelerated Cost Recovery System, a method of depreciation used for tax purposes in the United States that allows for accelerated depreciation over the asset's life.

Depreciation Schedule

A table that shows the reduction in value of a company's assets over time.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.