Economics · Monetary Economics
The liquidity preference curve slopes downward from left to right because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1As interest rates rise, the opportunity cost of holding money decreases
- 2As interest rates rise, the opportunity cost of holding money increases✓
- 3As interest rates fall, the opportunity cost of holding money remains constant
- 4When interest rates fall, the central bank reduces the money supply
Correct answer
As interest rates rise, the opportunity cost of holding money increases
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