In the Liquidity-Preference Model, If the Nominal Interest Rate Is

question 8

Multiple Choice

In the liquidity-preference model, if the nominal interest rate is higher than the equilibrium interest rate

• A)both bond prices and nominal interest rate will eventually fall.
• B)both bond prices and nominal interest rate will eventually rise further
• C)bond prices will fall and nominal interest rate will eventually rise further
• D)bond prices will rise and nominal interest rate will eventually fall.

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Definitions:

Missing Value

A term used in statistics and data analysis to describe data points or elements that are absent or not recorded.

Equivalent Financial Position

A state in which two or more financial scenarios provide the same economic value or utility to an investor or individual.

Focal Date

A specific date used as a reference point for calculations in financial transactions, especially in annuities and other periodic payments.

Maturity Value

The amount payable to an investor at the end of a fixed term investment, including the principal and any accrued interest.