Using the theory of liquidity preference what effect does an increase in the money supply has on the real interest rate Select one O a. An increase in the money supply shits the supply of real money balances to the right leading to an decrease in the interest rate to regain equitum Ob an increase in the money supply has no effect on the interest rate because prices are still fed c An increase in the money supply shifts the demand for real money balances to the right leading to an increase in the interest rate to regain equilibrium O d. An increase in the money supply shifts the supply of real money balances to the right leading to an increase in the interest rate to regain equilibrium

Using the theory of liquidity preference what effect does an increase in the money supply has on the real interest rate Select one O a. An increase in the money supply shits the supply of real money balances to the right leading to an decrease in the interest rate to regain equitum Ob an increase in the money supply has no effect on the interest rate because prices are still fed c An increase in the money supply shifts the demand for real money balances to the right leading to an increase in the interest rate to regain equilibrium O d. An increase in the money supply shifts the supply of real money balances to the right leading to an increase in the interest rate to regain equilibrium

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 3CQQ

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Question

Using the theory of liquidity preference what effect does an increase in the money supply has on the real interest rate
Select one
O a. An increase in the money supply shits the supply of real money balances to the right leading to an decrease in the interest rate to regain equitum
OD an increase in the money supply has no effect on the interest rate because prices are still fed
@cAn increase in the money supply shifts the demand for real money balances to the right leading to an increase in the interest rate to regain equarium
O d. An increase in the money supply shifts the supply of real money balances to the right leading to an increase in the interest rate to regain equilibrium

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