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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