Consider the market for money in the liquidity preference framework. If the Bank of Canada decreases moneysupply, and at the same time contracting economy pushes people's incomes down, then:Select one:А.the equilibrium interest rate will increase, the change in the equilibrium quantity of money will be ambiguous.В.the change in the equilibrium interest rate will be ambiguous, the equilibrium quantity of money will decrease.С.both the equilibrium interest rate and the equilibrium quantity of money will increase.O D.both the equilibrium interest rate and the equilibrium quantity of money will decrease.

All else being equivalent, a greater cash supply brings down market rate of interest, making it more…

Consider the market for money in the liquidity preference framework. If the Bank of Canada decreases money supply, and at the same time contracting economy pushes people's incomes down, then: Select one: А. the equilibrium interest rate will increase, the change in the equilibrium quantity of money will be ambiguous. O B. the change in the equilibrium interest rate will be ambiguous, the equilibrium quantity of money will decrease. С. both the equilibrium interest rate and the equilibrium quantity of money will increase. D. both the equilibrium interest rate and the equilibrium quantity of money will decrease.

Consider the market for money in the liquidity preference framework. If the Bank of Canada decreases money supply, and at the same time contracting economy pushes people's incomes down, then: Select one: А. the equilibrium interest rate will increase, the change in the equilibrium quantity of money will be ambiguous. O B. the change in the equilibrium interest rate will be ambiguous, the equilibrium quantity of money will decrease. С. both the equilibrium interest rate and the equilibrium quantity of money will increase. D. both the equilibrium interest rate and the equilibrium quantity of money will decrease.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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