If the Liquidity Effect Is Smaller Than the Other Effects,and

question 65

Multiple Choice

If the liquidity effect is smaller than the other effects,and the adjustment of expected inflation is slow,then the

• A) interest rate will fall.
• B) interest rate will rise.
• C) interest rate will initially fall but eventually climb above the initial level in response to an increase in money growth.
• D) interest rate will initially rise but eventually fall below the initial level in response to an increase in money growth.

---

Definitions:

Unrestricted Submarine Warfare

A type of naval warfare in which submarines attack merchant ships without warning, as practiced by Germany in both World Wars.

Allied Supply Shipments

The transportation and delivery of military and humanitarian supplies by the Allied nations to their forces and occupied territories during times of conflict, particularly noted in World Wars I and II.

American Mobilization

the process wherein the United States prepares and organizes its military and civilian resources for war or national defense, notably during World War II.

Wilsonian Ideals

based on President Woodrow Wilson's principles, promote democracy, capitalism, and national self-determination, shaping U.S. foreign policy in the 20th century.