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Households become morecautious regarding cash holdings

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Reference no: EM131415930

Consider a Keynesian model with partially sticky prices. Suppose households become morecautious regarding cash holdings. What can we say about the interest rate when this change occurs?

A. Increase r because IS shifts out

B. Decrease r because LM shifts out

C. Increase r because LM shifts in

D. Decrease r because IS shifts in

Reference no: EM131415930

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