According to Liquidity Preference Theory,an Increase in the Price Level

question 135

Multiple Choice

According to liquidity preference theory,an increase in the price level causes the interest rate to

• A)increase,which increases the quantity of goods and services demanded.
• B)increase,which decreases the quantity of goods and services demanded.
• C)decrease,which increases the quantity of goods and services demanded.
• D)decrease,which decreases the quantity of goods and services demanded.

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Definitions:

Market- Return

The amount of profit or loss generated by an investment over a given period, often expressed as a percentage of the investment's initial cost.

Present Dividend

A dividend currently being paid out to shareholders from a company's earnings.

Intrinsic Value

The real or true value of a company, stock, currency or product determined through fundamental analysis without reference to its market value.

Technical Analysis

The evaluation of securities by means of studying past market data, primarily price and volume.