Multiple Choice
Under sticky prices
A) a fall in the money supply raises the interest rate to preserve money market equilibrium.
B) a fall in the money supply reduces the interest rate to preserve money market equilibrium.
C) a fall in the money supply keeps the interest rate intact to preserve money market equilibrium.
D) a fall in the money supply does not affect the interest rate in the short run, only in the long run.
E) a fall in the money supply raises the interest rate to preserve money market equilibrium in the long run.
Correct Answer:
Verified
Correct Answer:
Verified
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