According to the theory of liquidity preference, a decrease in the nominal money supply by the central bank leads to the: O a. O b. O C. O d. Decline in the price level to increase the supply of nominal money balances. Increase in the supply of real money balances and in the interest rate. Decrease in the supply of real money balances and in the interest rate. None of the other choices are correct.

According to the theory of liquidity preference, a decrease in the nominal money supply by the central bank leads to the: O a. O b. O C. O d. Decline in the price level to increase the supply of nominal money balances. Increase in the supply of real money balances and in the interest rate. Decrease in the supply of real money balances and in the interest rate. None of the other choices are correct.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter20: Monetary Policy

Section: Chapter Questions

Problem 6SQ

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