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Suppose that hackers manage to disable the nation's automatic teller machines, making withdrawals from bank accounts difficult and sometimes impossible. As a precaution, most people
Suppose that hackers manage to disable the nation's automatic teller machines, making withdrawals from bank accounts difficult and sometimes impossible. As a precaution, most people choose to keep more cash on hand, increasing the demand for money. The Fed does not change the money supply. Using the theory of liquidity preference, explain how this affects the interest rate. How does this then affect aggregate demand?
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