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According to the Theory of Liquidity Preference, Decreasing the Money

Question 63

Multiple Choice

According to the theory of liquidity preference, decreasing the money supply will _____ nominal interest rates in the short run, and, according to the Fisher effect, decreasing the money supply will _____ nominal interest rates in the long run.


A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase

Correct Answer:

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