Multiple Choice
According to the theory of liquidity preference, what does an increase in the price level cause the interest rate and investment to do?
A) It causes both the interest rate and investment to rise.
B) It causes both the interest rate and investment to fall.
C) It causes the interest rate to rise and investment to fall.
D) It causes the interest rate to fall and investment to rise.
Correct Answer:
Verified
Correct Answer:
Verified
Q2: According to liquidity-preference theory, if the quantity
Q3: According to liquidity preference theory, when do
Q4: The theory of liquidity preference assumes that
Q6: Which theory is the most appropriate to
Q7: How does the interest rate change when
Q8: How do open-market purchases affect the price
Q9: Which of the following is NOT a
Q10: Which of the following is the most
Q11: When the Bank of Canada increases the
Q171: Explain why the interest rate is the