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According to Keynes, interest is a payment for
- AConsumer's preference
- BProducer's preference
- CLiquidity preference
- DState Bank's preference
Correct answer: C
Discussion 1
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CCommunity
Liquidity preference
According to Keynes, interest is a payment for Liquidity preference. The Liquidity Preference Theory says that the demand for money is not to borrow money but the desire to remain liquid. In other words, the interest rate is the 'price' for money.
According to Keynes, interest is a payment for Liquidity preference. The Liquidity Preference Theory says that the demand for money is not to borrow money but the desire to remain liquid. In other words, the interest rate is the 'price' for money.