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 curve. An increase in the price level shifts money demand right.
B. an increase in the interest rate increases the quantity of money demanded. This is shown as a movement along the curve. An increase in the price level shifts money demand left.
C. an increase in the price level reduces the quantity of money demanded. This is shown as a movement along the curve. An increase in the interest rate shifts money demand right.
D. an increase in the price level increases the quantity of money demanded. This is shown as a movement along the curve. An increase in the interest rate shifts money demand left.
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According to the theory of liquidity preference, which variable adjusts to balance the supply and demand for money?
A. interest rate
B. money supply
C. quantity of output
D. price level
Refer to Figure 1. There is excess money demand at an interest rate of
A. 2 percent.
B. 3 percent.
C. 4 percent.
D. None of the above is correct.
Refer to Figure 1. Which of the following is correct?
A. If the interest rate is 4 percent, there is excess money demand, and the interest rate will fall.
B. If the interest rate is 3 percent, there is excess money supply, and the interest rate will rise.
C. If the interest rate is 4 percent, the demand for goods will rise when the money market is in its new equilibrium.
D. None of the above is correct.
Which of the following statements is correct?
A. In the short run, output is determined by the amount of capital, labor, and technology; the interest rate adjusts to balance the supply and demand for money; the price level adjusts to balance the supply and demand for loanable funds.
B. In the short run, output is determined by the amount of capital, labor, and technology; the interest rate adjusts to balance the supply and demand for loanable funds; the price level adjusts to balance the supply and demand for money.
C. In the short run, output responds to the aggregate demand for goods and services; the interest rate adjusts to balance the supply and demand for money; the price level is stuck.
D. In the short run, output responds to the aggregate demand for goods and services; the interest rate adjusts to balance the supply and demand for loanable funds; the price level adjusts to balance the supply and demand for money.