According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:

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Question:
According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:

1.Reduce the demand for money

2.Decrease output and employment

3.Raise interest rates

4.Reduce the supply of money

Posted Date:-2021-11-29 03:59:12

More MCQS Questions and answers

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  2. 'Accrued interest' is:
  3. 'Reinsurance' refers to the practice by insurance companies of:
  4. A 'pay as you go' pension system is unsuitable for a private firm because:
  5. A 'Pay-As-You-Go' pension is one in which:
  6. A 'positive term premium' means:
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  9. A belief that expectations were exogenous could lead one to the view that judgements about the future were likely to be based on:
  10. A bond issued in July 1997 will mature in July 2013 for £100. In July 2003, its original maturity and residual maturity would be (respectively):
  11. A central bank which sets the short-term rate of interest must:
  12. A central bank wishes to indicate that its official interest rate will be 4.5% from tomorrow. What repurchase price should it set for 28 day repo deals in government bonds valued at £1m?
  13. A company has just declared a dividend of 8p per share on shares current valued at £1.50. Dividends have been growing steadily at 5 per cent p.a. The dividend yield on these shares is is:
  14. A corporate bond paying an annual coupon of £9 matures for £100 on 30 September 2011. What is its price on 1 October 2008 if interest rates are 8.5 per cent?
  15. A downward sloping yield curve most likely indicates:
  16. A firm announces that its next dividend payment will be 12p per share. The shares are currently priced at £1. The firm's earnings have recently grown at a rate of 9 per cent per year and this is expected to continue. The total annual return on these shares is:
  17. A government sale of treasury bills to the central bank is the nearest thing in a modern economy to:
  18. A mutual fund manager shifts part of his portfolio from long-dated bonds to money market instruments even though yields are unchanged. Most likely he is expecting:
  19. A retirement annuity is particularly attractive to someone who has:
  20. A share with a β-coefficient of 0.9 has a rate of return of 16%, when the whole market return is 17%. What return should it produce if the risk free rate rises from 7% to 8%, ceteris paribus.
  21. A sudden demand by depositors for notes and coin is an example of:
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  23. A unit trust fund is established with assets of £200m divided into 150m units. The value of the underlying assets rises to £250m. The value of each unit is:
  24. According to the Fisher hypothesis, the nominal rate of interest consists of:
  25. According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:
  26. According to the policy irrelevance theorem, why is policy irrelevant?
  27. According to the rational expectations hypothesis:
  28. All demand for money functions that are tested are macroeconomic relationships between the aggregate demand for money and other economic variables because:
  29. An 'open-end' investment fund is one which:
  30. An 'overdraft' economy is one in which:
  31. An airline expands its fleet of planes just before a serious accident reduces the demand for its flights. This is an example of:
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  33. An increase in (i) the price level and (ii) the rate of inflation:
  34. As the level of interest rates in the economy falls, the demand for money, ceteris paribus:
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  36. Assume that a central bank is willing to buy 14 day repos for $1m, with a repurchase price of $1,002,000. What rate of interest is the central bank charging?
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