Economics (AS & A Level) · Oct / Nov 2025 · Paper 34 · Question 20
The diagram shows two liquidity preference curves LP1 and LP2. What would cause the liquidity preference curve to shift from LP1 to LP2?
- AThere has been a fall in national income.
- BThere has been a rise in the general price level.
- CThere has been an increase in government borrowing.
- DThere has been an increase in the rate of interest.
As printed in the paper
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Correct answer: B. There has been a rise in the general price level.
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