According to Liquidity Preference Theory,the Slope of the Money Demand

question 65

Multiple Choice

According to liquidity preference theory,the slope of the money demand curve is explained as follows:

• A)Interest rates rise as the Fed reduces the quantity of money demanded.
• B)Interest rates fall as the Fed reduces the supply of money.
• C)People will want to hold less money as the cost of holding it falls.
• D)People will want to hold more money as the cost of holding it falls.

---

Definitions:

Substitute Resources

Alternative resources or inputs that can be used in production to replace other resources, helping to maintain production when some resources are scarce.

Natural Resource

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain.

Consumer Income

The total earnings or financial inflow that an individual receives from various sources, including wages, investments, and benefits, which determines their purchasing power.

Serious Public Concern

A matter that is of significant interest or worry to the general public often requiring government attention or action.