According to Liquidity Preference Theory

question 33

Multiple Choice

According to liquidity preference theory,

• A)an increase in the interest rate reduces the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the price level shifts money demand to the right.
• B)an increase in the interest rate increases the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the price level shifts money demand leftward.
• C)an increase in the price level reduces the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the interest rate shifts money demand rightward.
• D)an increase in the price level increases the quantity of money demanded.This is shown as a movement along the money-demand curve.An increase in the interest rate shifts money demand leftward.

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Definitions:

Resources

Assets, materials, and inputs used to produce goods and services; can be natural, human, or capital.

Useful Forms

Objects or substances that have been modified or structured in a way that makes them beneficial or practical for specific purposes.

Natural Gas

A fossil fuel used primarily for heating, cooking, and electricity generation, consisting mainly of methane.

Government Savings Bond

A low-risk investment product issued by a government, offering a fixed rate of interest over a specified period.