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Question

<div class="txt-body question-body"><div class="feedback-rating abuse-flag" data-questionid="12254393"></div><div class="ugc-base"><p>According to the liquidity preference model, if the FederalReserve increases the money supply, the equilibrium interest rate________, and this leads to _________ in the quantity demanded ofnonmonetary interest-bearing financial assets.</p><table cellspacing="0" cellpadding="0" border="0" style="width:749px;"><tbody><tr><td style="width:716px;"><table cellspacing="0" cellpadding="0" border="0" style="width:716px;"><tbody><tr><td><p>a)</p></td><td style="width:696px;"><p>falls; an increase</p></td></tr></tbody></table></td></tr><tr><td style="width:716px;"><table cellspacing="0" cellpadding="0" border="0" style="width:716px;"><tbody><tr><td><p>b)</p></td><td style="width:696px;"><p>falls; a decrease</p></td></tr></tbody></table></td></tr><tr><td style="width:716px;"><table cellspacing="0" cellpadding="0" border="0" style="width:716px;"><tbody><tr><td><p>c)</p></td><td style="width:697px;"><p>rises; an increase</p></td></tr></tbody></table></td></tr><tr><td style="width:716px;"><table cellspacing="0" cellpadding="0" border="0" style="width:716px;"><tbody><tr><td><p>d)</p></td><td style="width:696px;"><p>rises; a decrease</p></td></tr></tbody></table></td></tr></tbody></table></div></div>

Explanation / Answer

&lt;div class=&quot;txt-body answer-body&quot;&gt; &lt;div class=&quot;answer-given-body ugc-base&quot;&gt; &lt;p&gt;a.) Falls , an increase&lt;/p&gt; &lt;/div&gt; &lt;/div&gt;

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