According to the theory of liquidity preference, a decrease in the price level causes the
a. interest rate and investment to rise.
b. interest rate and investment to fall.
c. interest rate to rise and investment to fall.
d. interest rate to fall and investment to rise.
d
You might also like to view...
The extent of the decline in output associated with the imposition of an employment tax depends on the
A) slope of the labor supply curve. B) tax rate. C) wage rate. D) slope of the labor demand curve.
If a large number of people were to leave their civilian jobs and join the military, which of the following would increase?
A) the civilian labor force B) the civilian employment ratio C) the civilian unemployment rate D) the civilian labor-force participation rate E) none of the above
Risk-averse individuals will diversify their investments because this will:
a. increase their expected returns. b. provide them with some much-needed variety. c. reduce the variability of their returns. d. reduce their transaction costs.
The Fed wants to increase the quantity of funds available through the Term Auction Facility. The Fed sets the a. price of the loan, and money supply increases
b. quantity of borrowing, and money supply increases. c. price of the loan, and money supply decreases. d. quantity of borrowing, and money supply decreases.