The Short-Run Effects on the Interest Rate Are

question 168

Multiple Choice

The short-run effects on the interest rate are

• A)shown equally well using either liquidity preference theory or classical theory.
• B)best shown using classical theory.
• C)best shown using liquidity preference theory.
• D)not shown well by either liquidity preference theory or classical theory.

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Definitions:

Increasing Cost Industry

An industry in which production costs increase as output expands, typically due to factors such as input limitations and increased demand for inputs.

Long-Run Supply Curve

A curve showing the relationship between price and quantity supplied that takes into account all possible adjustments in inputs and outputs.

Constant-cost Industry

An industry where the costs of production do not change as the total output in the industry changes.

Long-run Supply

Long-run Supply refers to the quantity of a good that producers are willing and able to supply onto the market at different price levels when all production inputs can be varied.