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Changes in Equilibrium Interest Rates in the Liquidity Preference Framework
1) In the Keynesian liquidity preference framework, an increase in the interest rate causes the demand curve for money to ________, everything else held constant.
A) shift right
B) shift left
C) stay where it is
D) invert
2) A lower level of income causes the demand for money to ________ and the interest rate to ________, everything else held constant.
A) decrease; decrease
B) decrease; increase
C) increase; decrease
D) increase; increase
3) When real income ________, the demand curve for money shifts to the ________ and the interest rate ________, everything else held constant.
A) falls; right; rises
B) rises; right; rises
C) falls; left; rises
D) rises; left; rises
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