Fisher’s Time Preference Theory

Fisher’s Time Preference Theory Fisher emphasizes the fact of “time preference” as the central point in the ‘Theory. Individuals prefer present satisfactions to equally certain future satisfactions. They are thus impatient to spend their...

Austrian or Agio Theory

Austrian or Agio Theory This theory is also caIJed Psychological Theory of interest. First advanced by J Rae in 1834. this theory was given its final shape by 80Iun Bawerk of the Austrian school of economists. It became popular later among some American economists,...

Fisher’s Time Preference Theory

Fisher’s Time Preference Theory Fisher emphasizes the fact of “time preference” as the central point in the Theory. Individuals prefer present satisfactions to equally certain future satisfactions. They are thus impatient to spend their incomes now....

Abstinence or Waiting Theory

Abstinence or Waiting Theory The Theory. Another theory of Interest is the Abstinence Theory. whereas the Productivity Theory. tries to explain interest from tl 1e side of demand; the Abstinence, e Theory approaches the problem from the side of supply. It was ;...

HOW INTEREST ARISES

HOW INTEREST ARISES Hence, it is scarcity rather than productivity wick explains interest. Further, if interest depended merely on productivity (not marginal productivity), interest rates should vary in proportion to the productiveness of capital. In actual fact, pure...

HOW INTEREST ARISES

HOW INTEREST ARISES Productivity Theory The Theory. To take the Productivity Theory first, some older economists thought that capital was productive of goods in the same • sense as land was productive of crops. They held that interest was paid because ·production with...