In Liquidity Preference Theory, an Increase in the Interest Rate

question 125

True/False

In liquidity preference theory, an increase in the interest rate, other things the same, decreases the quantity of money demanded, but does not shift the money demand curve.

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Definitions:

Straight-Line Depreciation

Method that allocates the depreciable cost of an asset in equal periodic amounts over its useful life

Book Value

The net value of a company's assets as found on its balance sheet, calculated by subtracting total liabilities from total assets.

Depreciable Asset

An asset that loses value over time due to wear and tear or obsolescence, and its cost is allocated over its useful life through depreciation.

Acquisition Cost

The total cost incurred to acquire an asset, including purchase price and any additional expenses necessary to get the asset ready for its intended use.