Arrange in descending order the levels of rate of interest in relation to IS-LM model: a) Classical…
The descending interest rate order is the classical range, intermediate range, and Keynesian range. The Keynesian range describes low interest rates associated with the…
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Arrange in descending order the levels of rate of interest in relation to IS-LM model:
a) Classical range
b) Keynesian range
c) Intermediate range
Answer and explanation
Correct answer A
The descending interest rate order is the classical range, intermediate range, and Keynesian range. The Keynesian range describes low interest rates associated with the liquidity trap, while the classical range corresponds to high interest rates. The intermediate range lies between them.
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Telangana SET (TG SET)