According to Keynes, a shift in liquidity preference is
a. a shift in the money demand schedule drawn against the interest rate as the level of income changes.
b. a change in the amount of money demanded for given levels of the interest rate and income.
c. a shift in individuals' portfolios away from bonds and toward holding an increased amount of money for given levels of the interest rate and income.
d. Either a or c
e. all of the above
Question 2
Which of the following statements is (are) correct? Regardless of whether the LM curve is vertical or upward sloping,
a. a money stock target is superior to an interest rate target when the uncertainty facing the policymaker concerns the IS schedule.
b. an interest rate target is always superior to a money stock target when the uncertainty facing the policymaker concerns the IS schedule.
c. both a money stock target or interest rate target provide the same results when the uncertainty facing the policymaker concerns the IS schedule.
d. a money stock target is never superior to an interest rate target when the uncertainty facing the policymaker concerns the IS schedule.
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