In the Liquidity Preference model, the endogeneous variable is -supply of money -price level -income -interest...
In the Liquidity Preference model, the endogeneous variable is
-supply of money
-price level
-income
-interest rate
Homework Answers
Answer
The correct answer is (d) interest rate
Endogenous variable is the variable which is determined within the model and not considered as given. The Liquidity preference model developed by Keynes helps us in finding the interest rate by the intersection of real money supply and real money demand. According to Keynes Higher the interest rate higher will be the opportunity cost of holding money and hence lower will be the money demand and Hence Money demand curve will be downward sloping. Also Money Supply and Price are set by the federal government and hence considered as constant resulting in vertically straight line Real Money Supply Curve with interest rate on y axis. Hence, The Liquidity preference model determines the interest rate in the market and hence interest rate is the endogenous variable,
Hence, the correct answer is (d) interest rate
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In the Liquidity Preference model, the endogeneous variable is -supply of money -price level -income -interest...
decided with an adel 14. The endogenous variable in the liquidity preference model is a money...
decided with an adel 14. The endogenous variable in the liquidity preference model is a money supply bmoney demand. price level d. velocity of money. • e interest rate.. 15. In developing countries, financial markets are not developed as the developed countries. Honce most businesses depend on funding from banks. So developing countries depend mostly on .a. indirect finance. b direct finance. c. non-intermediary finance d. government finance. Figure 3-2 QoFM 16. The graph above shows the liquidity preference model....
In the liquidity-preference model, the slope of the money supply curve is: horizontal, reflecting the assumption...
In the liquidity-preference model, the slope of the money supply curve is: horizontal, reflecting the assumption that the Bank of Canada does not completely control the supply of money. horizontal, reflecting the assumption that the Bank of Canada completely controls the supply of money vertical, reflecting the assumption that the Bank of Canada does not completely control the supply of money vertical, reflecting the assumption that the Bank of Canada completely controls the supply of money This assumption is: O...
36. According to liquidity-preference theory, why is the g? money-demand curve downward slopin a. because interest...
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The theory of liquidity preference implies that an increase in the price level shifts the Select...
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According to the theory of liquidity preference, interest rates should go up when there is a decrease in money supply.
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Question 8 The theory of liquidity preference implies that an increase in the price level shifts...
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Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a...
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Which of the following will increase the money demand curve in the Liquidity Preference model? decrease...
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The implication of theory of liquidity preference on the interest rate explains the downward sloping money...
The implication of theory of liquidity preference on the interest rate explains the downward sloping money demand curve. Analyse this using an appropriate diagram.
decided with an adel 14. The endogenous variable in the liquidity preference model is a money supply bmoney demand. price level d. velocity of money. • e interest rate.. 15. In developing countries, financial markets are not developed as the developed countries. Honce most businesses depend on funding from banks. So developing countries depend mostly on .a. indirect finance. b direct finance. c. non-intermediary finance d. government finance. Figure 3-2 QoFM 16. The graph above shows the liquidity preference model....
In the liquidity-preference model, the slope of the money supply curve is: horizontal, reflecting the assumption that the Bank of Canada does not completely control the supply of money. horizontal, reflecting the assumption that the Bank of Canada completely controls the supply of money vertical, reflecting the assumption that the Bank of Canada does not completely control the supply of money vertical, reflecting the assumption that the Bank of Canada completely controls the supply of money This assumption is: O...
36. According to liquidity-preference theory, why is the g? money-demand curve downward slopin a. because interest rates rise as the Bank the qua b. because interest rates fall as the Bank of Canada reduces the supp c. because people will want to hold less money as the cost of doing so d. because people will want to hold more money as the cost of doing rest rates fall as the ofCanada reduces the quantity of money demanded anada reduces the...
7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates in the short run, and, according to the Fisher effect, decreasing the money supply will nominal interest rates in the long run. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 8. If neither investment nor consumption depends on the interest rate, then the IS curve is , and_ policy has no effect on output. A) vertical; monetary B) horizontal; monetary...
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