In the Simple Liquidity Preference Model, Changes to the Money

question 40

Multiple Choice

In the simple liquidity preference model, changes to the money supply will have a smaller effect on interest rates the:

• A) flatter, more elastic is the money demand curve.
• B) flatter, less elastic is the money demand curve.
• C) steeper, more elastic is the money demand curve.
• D) steeper, less elastic is the money demand curve.

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Definitions:

Fire Extinguishers

Fire extinguishers are active fire protection devices used to extinguish or control small fires, often in emergency situations.

Subsidized

Financial support provided by the government or other institutions to reduce the cost of services or commodities.

Tax

Compulsory financial charges or levies imposed by a government on individuals or entities to fund public spending and government operations.

Positive Externality

A benefit that affects a party who did not choose to incur that benefit, commonly seen in situations where the activity of one entity leads to positive effects for others.