Liquidity Preference Theory
According to Keynes, interest is not a reward for waiting, nor is it a payment for time preference. Tile rate of interest is a reward fur parting with liquidity. This theory not only explains why interest arises, but it also explains how the rate of interest is determined. We shall discuss this theory in a later section of this chapter.

[av_button label='Get Any Economics Assignment Solved for US$ 55' link='manually,' link_target='' color='red' custom_bg='#444444' custom_font='#ffffff' size='large' position='center' icon_select='yes' icon='ue859' font='entypo-fontello']

Share This