According to Liquidity Preference Theory

question 33

Multiple Choice

According to liquidity preference theory,

• A)an increase in the interest rate reduces the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the price level shifts money demand to the right.
• B)an increase in the interest rate increases the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the price level shifts money demand leftward.
• C)an increase in the price level reduces the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the interest rate shifts money demand rightward.
• D)an increase in the price level increases the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the interest rate shifts money demand leftward.

---

Definitions:

Adjusted Gross Income

A measure of income calculated from your gross income and allows specific deductions, impacting tax liability.

Medical Care Insurance Premiums

The costs paid for insurance policies that cover medical and surgical expenses; these premiums are often deductible on individual tax returns if certain criteria are met.

Medical Expenses

Costs related to healthcare, including treatments, surgeries, and preventive services, which may be deductible under certain tax conditions.

Itemized Deductions

Specific expenses that taxpayers can claim to reduce their taxable income, as opposed to taking the standard deduction.