According to the theory of liquidity preference, a decrease in the nominal money supply by the central bank leads to the: O a. O b. O C. O d. Decline in the price level to increase the supply of nominal money balances. Increase in the supply of real money balances and in the interest rate. Decrease in the supply of real money balances and in the interest rate. None of the other choices are correct.
According to the theory of liquidity preference, a decrease in the nominal money supply by the central bank leads to the: O a. O b. O C. O d. Decline in the price level to increase the supply of nominal money balances. Increase in the supply of real money balances and in the interest rate. Decrease in the supply of real money balances and in the interest rate. None of the other choices are correct.
Chapter20: Monetary Policy
Section: Chapter Questions
Problem 6SQ
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![According to the theory of liquidity preference, a decrease in the nominal money supply by the central
bank leads to the:
a.
O b.
O C.
O d.
Decline in the price level to increase the supply of nominal money balances.
Increase in the supply of real money balances and in the interest rate.
Decrease in the supply of real money balances and in the interest rate.
None of the other choices are correct.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fefd983fe-7c0b-48de-beab-c941425cca62%2F871bb13a-68ac-4d12-aa31-6c0ca5e4838d%2F4olbax8_processed.png&w=3840&q=75)
Transcribed Image Text:According to the theory of liquidity preference, a decrease in the nominal money supply by the central
bank leads to the:
a.
O b.
O C.
O d.
Decline in the price level to increase the supply of nominal money balances.
Increase in the supply of real money balances and in the interest rate.
Decrease in the supply of real money balances and in the interest rate.
None of the other choices are correct.
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