In the Liquidity-Preference Model

question 49

Multiple Choice

In the liquidity-preference model,

• A)both the nominal interest rate and the price level in the economy are exogenous variables.
• B)both the nominal interest rate and the price level in the economy are endogenous variables.
• C)the nominal interest rate is an exogenous variable, while the price level in the economy is an endogenous variable.
• D)the nominal interest rate is an endogenous variable, while the price level in the economy is an exogenous variable.

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Definitions:

Earnings Restatements

The act of amending previously reported financial statements to correct errors.

Dividends

Payments made by a corporation to its shareholders, usually in the form of cash or additional shares, from its profits.

Depreciation

This is the systematic allocation of the cost of a tangible asset over its useful life. It reflects the consumption of the asset over time.

Tax Bill

A tax bill is an official statement from a governmental authority specifying the amount of taxes owed by an individual or organization for a certain period.