According to the Liquidity-Preference Theory, How Does an Increase in the Price

question 60

Multiple Choice

According to the liquidity-preference theory, how does an increase in the price level affect the interest rate?

• A) It increases the money demand and the interest rate.
• B) It lowers the money demand and the interest rate.
• C) It increases the money demand and lowers the interest rate.
• D) It lowers the money demand and increases the interest rate.

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