Economics (M.Phil./Ph.D.) 2015 Panjab University Entrance Exam With Answers

Practice Mode:
21.

A liquidity effect occurs when :

A: A reduction in government spending lowers the rate of interest
B: A money supply increase lowers the rate of interest
C: An increase in government spending increases the rate of interest
D: A money supply increase raises the rate of interest

The answer is: B