Question

Following an increase in money supply, if the interest rates fall immediately and then eventually rise...

Following an increase in money supply, if the interest rates fall immediately and then eventually rise higher than the original level, then :

a. The liquidity effect is weaker than the income and price level effect and there is fast adjustment

b. The liquidity effect is stronger than the income and price level effect

c. The liquidity effect is weaker than the income and price level effect and there is slow adjustment

d. The liquidity effect is stronger than the income and price level effect and there is slow adjustment

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