MODERN THEORY OF INTEREST: HICKS-HANSEN SYNTHESIS

MODERN THEORY OF INTEREST: HICKS-HANSEN SYNTHESIS We have discussed above the various theories of the rate of interest put forward from time to lime. But we have seen that all these theories suffer from various drawbacks and are indeterminate. The Keynesian theory...

Keynesian vs. Loanable Funds Theory

Keynesian vs. Loadable Funds Theory We may note below a few points of difference between the Keynesian Theory and the Loadable Funds Theory:- (i) Keynesian theory regards money as stock. whereas the loadable funds theory treats money as a flow. That is why Keynesian...

KEYNESIAN AND OTHER THEORIES OF INTEREST COMPARED

KEYNESIAN AND OTHER THEORIES OF INTEREST COMPARED  Keynesian Classical Theory The Keynesian Theory differs from the Classical’ Theory in the following respects  Ii) The classical theory applies to a situation of full employment and constant national...

Factors Governing Liquidity Preference

Factors Governing Liquidity Preference Liquidity preference of a particular individual depends upon several considerations: The question is: Why should the people hold their resources liquid or in the form of ready money. when they can get interest by lending such...

LIQUIDITY PREFERENCE THEORY

LIQUIDITY PREFERENCE THEORY  In this epoch-making book. “The General Theory of Employment, Interest and Money”. the late Lord Keynes gave a new view of interest. According to him. “Interest is the reward for parting with liquidity for.a specified...

Criticism of Liquidity Preference Theory

Criticism of Liquidity Preference Theory Keynes theory, too, has met with criticism: Firstly, it has been pointed out that the rate of interest is not purely a monetary phenomenon. Real forces like productivity of capital and thrifting css or saving by the people also...