5 Questions
According to Keynes, what are the determinants of the interest rate in his analysis?
The determinants of the interest rate in Keynes' analysis are the 'monetary' factors alone, focusing on the demand for and supply of money.
How does Keynes describe the rate of interest in his analysis?
Keynes describes the rate of interest as purely 'a monetary phenomenon.'
What does Keynes consider as a reward for 'parting away with liquidity'?
Keynes considers interest as the reward for 'parting away with liquidity.'
What does Keynes refer to as the most liquid asset, and why do people prefer it?
Keynes refers to cash as the most liquid asset, and people prefer it due to their preference for holding cash rather than investing in assets.
What factors determine how much of their resources people will hold in the form of cash and how much they will spend, according to Keynes?
According to Keynes, the determination of how much of their resources people will hold in the form of cash and how much they will spend depends upon what Keynes calls liquidity preference.
Test your knowledge of Keynesian liquidity preference theory with this quiz. Explore the determinants of the equilibrium interest rate and compare the Keynesian and classical models.
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