Brief Principles of Macroeconomics...
Solutions
Brief Principles of Macroeconomics...
Use the theory of liquidity preference to explain how a decrease in the money supply affects the equilibrium interest rate. How does this change in monetary policy affect the aggregate-demand curve?
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According liquidity preference theory, the interest rate adjusts to bring money supply and money demanded into the balance. A decrease in the money supply increases the equilibrium interest rate...
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