Keynesian Liquidity Preference Theory Quiz

The determinants of the interest rate in Keynes' analysis are the 'monetary' factors alone, focusing on the demand for and supply of money.

Keynes describes the rate of interest as purely 'a monetary phenomenon.'

Keynes considers interest as the reward for 'parting away with liquidity.'

<p>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.</p> Signup and view all the answers

<p>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.</p> Signup and view all the answers