According to liquidity preference theory, as real income ...

[amal]

According to liquidity preference theory, as real income increases, so does ________.
 
  A) the supply of real money balances
  B) the demand for real money balances
  C) the real interest rate
  D) all of the above
  E) none of the above

Question 2

The risk that a borrower has a greater understanding about their potential future behavior than a potential lender is known as ________.
 
  A) the problem of adverse selection
  B) the problem of moral hazard
  C) ornamental torsion
  D) the asymmetric innovation problem

[sabina576]

Answer to Question 1

B

Answer to Question 2

B

[amal]

Thanks for the timely response, appreciate it

[mochi09]

YES! Correct, THANKS for helping me on my review