The Theory of Liquidity Preference Implies That the Quantity of Real

question 53

Multiple Choice

The theory of liquidity preference implies that the quantity of real money balances demanded is:

• A) negatively related to both the interest rate and income.
• B) positively related to both the interest rate and income.
• C) positively related to the interest rate and negatively related to income.
• D) negatively related to the interest rate and positively related to income.

---

Definitions:

Financial Intermediary

An institution that acts as a middleman between savers and borrowers, facilitating the flow of funds in the financial system.

Goldman Sachs

A leading global investment banking, securities, and investment management firm that provides a wide range of financial services to a sizable and diversified client base.

Venture Capital

Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

Start-up Companies

Newly established businesses typically characterized by high growth potential and innovative business models or products.