Economics 9708 · AS & A Level · Monetary policy

Monetary policy — practice question

The diagram illustrates two liquidity preference curves $LP_1$ and $LP_2$. What would make the liquidity preference curve move from $LP_1$ to $LP_2$?

  • AThere has been a fall in national income.
  • BThere has been a rise in the general price level.
  • CThere has been an increase in government borrowing.
  • DThere has been an increase in the rate of interest.

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