According to Liquidity Preference Theory,if the Price Level Increases,then the Equilibrium

question 7

Multiple Choice

According to liquidity preference theory,if the price level increases,then the equilibrium interest rate

• A)rises and the aggregate quantity of goods demanded rises.
• B)rises and the aggregate quantity of goods demanded falls.
• C)falls and the aggregate quantity of goods demanded rises.
• D)falls and the aggregate quantity of goods demanded falls.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, without control or joint control.

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and the potential for dividends.

Fair Value Through Profit or Loss

A financial accounting method where changes in fair value of an asset or liability are reflected in the profit or loss as they occur.

Balance Sheet

A financial statement that shows a company’s assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.