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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