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.

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Definitions:

Moral Intensity

The degree to which a situation or decision has ethical significance, influencing individuals’ moral judgments and behaviors.

Utilitarianism Rule

A principle in ethics stating that the best action is the one that maximizes utility, often defined in terms of the wellbeing of sentient entities.

MARS Model

A framework describing four factors—Motivation, Ability, Role perceptions, and Situational factors—that affect individual behavior and performance.

Individual Behavior

Actions, mannerisms, and reactions of a single person, influenced by their environment, personality, emotions, and values.