In the Simple Liquidity Preference Model, If the Money Demand

question 20

Multiple Choice

In the simple liquidity preference model, if the money demand curve is elastic, then:

• A) small changes to the money supply will cause large changes to the interest rate.
• B) only large changes to the money supply will cause large changes to the interest rate.
• C) small changes to the money supply will cause insignificant changes to the interest rate.
• D) even large changes to the money supply will cause small changes to the interest rate.

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Definitions:

Simple Moving Average

A mathematical method used in finance and economics to calculate the average of a selected range of prices or quantities over a specific period of time.

Exponential Smoothing

Exponential smoothing is a forecasting technique that applies decreasing weights to past observations, with more recent data given more significance.

Holt's Method

A forecasting technique that extends exponential smoothing to capture trends in historical data, used in time series analysis.

Effective Forecasting

The process of predicting future trends, demand, and events accurately using historical data, statistical models, and market analysis to inform decision-making.