According to the Theory of Liquidity Preference, If the Demand

question 95

Multiple Choice

According to the theory of liquidity preference, if the demand for real money balances exceeds the supply of real money balances, individuals will:

• A) sell interest-earning assets in order to obtain non-interest-bearing money.
• B) purchase interest-earning assets in order to reduce holdings of non-interest-bearing money.
• C) purchase fewer goods and services.
• D) be content with their portfolios.

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Definitions:

Visualized

The process of forming a mental image of something, making it possible to see or imagine something within one's mind.

Selective Encoding

The cognitive process of focusing on and encoding only certain aspects of the environment or information while ignoring others.

Ambient Storage

Refers to the storage condition that does not require any controlled temperature or humidity conditions, allowing materials to be stored at room temperature.

Delayed Retrieval

The process where recalling information becomes more challenging after a period of time has passed since the initial learning or exposure.