The Liquidity Preference Function Shows That as ________

question 62

Multiple Choice

The liquidity preference function shows that as ________.

• A)real income decreases,so does the demand for real money balances
• B)the nominal interest rate increases,so does the demand for real money balances
• C)real income decreases,so does the real interest rate
• D)all of the above
• E)none of the above

---

Definitions:

Income Growth

An increase in the amount of money earned by individuals, households, or a country over time.

Productivity Growth

An increase in the efficiency of production, often measured by the ratio of output to inputs in the production process over time.

Produce Goods

The process of creating, manufacturing, or growing products intended for consumption or use.

Services

Intangible products such as healthcare, education, and financial consultation that are consumed by buyers in an economy.