According to Liquidity Preference Theory, If There Were a Surplus

question 87

Multiple Choice

According to liquidity preference theory, if there were a surplus of money, then

• A)the interest rate would be above equilibrium and the quantity of money demanded would be too large for equilibrium.
• B)the interest rate would be above equilibrium and the quantity of money demanded would be too small for equilibrium.
• C)the interest rate would be below equilibrium and the quantity of money demanded would be too small for equilibrium.
• D)the interest rate would be below equilibrium and the quantity of money demanded would be too large for equilibrium.

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Definitions:

Arbitration

A form of alternative dispute resolution where a neutral third party, the arbitrator, makes a binding decision to resolve a dispute between parties.

Work-to-rule

A form of industrial action in which employees perform their tasks exactly as outlined in their job descriptions, refusing to do any more than the minimum required as a means of protest.

Union Demands

Requests or requirements set forth by labor unions during negotiations with employers, relating to wages, benefits, working conditions, and other employment terms.

Customer Encouragement

Strategies or practices designed to motivate or persuade consumers to engage with, purchase, or support a product or service.