Use the liquidity preference framework

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Reference no: EM131173279

Use the liquidity preference framework to show what will happen to interest rates if the Central Bank increases the money supply. Make sure to include a fully-labeled graph for full credit.

Use the liquidity preference model to show why interest rates are said to be pro-cyclical (i.e. it rises when the economy—in terms of GDP—is expanding, and falls when it is contracting). Make sure to use a fully labeled graph for full credit.

Reference no: EM131173279

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