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Figure 4.4 -Figure 4.4 Illustrates the Effect of an Increased Rate of Rate

Question 49

Multiple Choice

Figure 4.4 -Figure 4.4 illustrates the effect of an increased rate of money supply growth. From the figure, one can conclude that the liquidity effect is ________ than the expected inflation effect and interest rates adjust ________ to changes in expected inflation. A) smaller; quickly B) larger; quickly C) larger; slowly D) smaller; slowly Figure 4.4
-Figure 4.4 illustrates the effect of an increased rate of money supply growth. From the figure, one can conclude that the liquidity effect is ________ than the expected inflation effect and interest rates adjust ________ to changes in expected inflation.


A) smaller; quickly
B) larger; quickly
C) larger; slowly
D) smaller; slowly

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