According to Liquidity Preference Theory,a Decrease in the Price Level

question 132

Multiple Choice

According to liquidity preference theory,a decrease in the price level causes the interest rate to

• A)increase,which increases the quantity of goods and services demanded.
• B)increase,which decreases the quantity of goods and services demanded.
• C)decrease,which increases the quantity of goods and services demanded.
• D)decrease,which decreases the quantity of goods and services demanded.

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Definitions:

Annual Rate of Return

The percentage of profit or loss on an investment over a one-year period.

How Much Decision

A consumer's determination of the quantity of a good or service to purchase, balancing the marginal utility and the price.

Total Revenues

The total amount of money generated by a firm from its sales activities before any costs or expenses are subtracted.

Total Costs

An alternate formulation for the sum of all expenses incurred in the production of goods or services, reflecting both fixed and variable components.