In the Liquidity-Preference Model, a Decrease in the Money Supply

question 64

Multiple Choice

In the liquidity-preference model, a decrease in the money supply causes

• A)the nominal interest rate to increase and the equilibrium quantity of money to decrease.
• B)the nominal interest rate to increase and the equilibrium quantity of money to remain unchanged.
• C)the nominal interest rate to decrease and the equilibrium quantity of money to remain unchanged.
• D)both the nominal interest rate and the equilibrium quantity of money to decrease.

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