Question
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According to the theory of liquidity preference, the opportunity cost of holding money rises when the...
According to the theory of liquidity preference, the opportunity cost of holding money rises when the interest rate rises, so people desire to hold more of it.
Select one:
True
False
In the long run, changes in government spending can affect prices, output, and unemployment rates if the spending programs alter the availability of natural resources, capital equipment or technology
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True
False
According to liquidity preference theory, the money supply curve is vertical because the Fed can dictate the quantity of money supplied by engaging in the purchase and sale of government bonds.
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True
False
An increase in the interest rate induces firms to borrow less, which will result in less investment spending and a decrease in the aggregate demand for goods and services.
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True
False
A lower price level leads to lower money demand, lower money demand leads to lower interest rates, and a lower interest rate increases the quantity of goods and services demanded
Select one:
True
False
Solutions
Expert Solution
Q. According to the theory of liquidity preference, the opportunity cost of holding money rises when the interest rate rises, so people desire to hold more of it.
Answer- True
Q. In the long run, changes in government spending can affect prices, output, and unemployment rates if the spending programs alter the availability of natural resources, capital equipment or technology
Answer- True
Q. According to liquidity preference theory, the money supply curve is vertical because the Fed can dictate the quantity of money supplied by engaging in the purchase and sale of government bonds
Answer- True
Q. An increase in the interest rate induces firms to borrow less, which will result in less investment spending and a decrease in the aggregate demand for goods and services
Answer- True
Q. A lower price level leads to lower money demand, lower money demand leads to lower interest rates, and a lower interest rate increases the quantity of goods and services demanded
Answer- True
Rahul Sunny answered 6 months agoRelated Solutions
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