经济学原理答案34.pdfVIP

Quick Quizzes 1. According to the theory of liquidity preference, the interest rate adjusts to balance the supply and demand for money. Therefore, a decrease in the money supply will increase the equilibrium interest rate. This decrease in the money supply reduces aggregate demand because the higher interest rate causes households to buy fewer houses, reducing the demand for residential investment, and causes firms to spend less on new factories and new equipment, reducing business investment.