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According to the Liquidity Preference Model, If the Federal Reserve

Question 96

Multiple Choice

According to the liquidity preference model, if the Federal Reserve increases the money supply, the equilibrium interest rate _____, and this leads to a(n) _____ in the quantity demanded of nonmonetary interest-bearing financial assets.


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

Correct Answer:

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