Solution Found!

Theory of Liquidity Preference: Interest Rate Adjustment

Chapter 34, Problem 1

(choose chapter or problem)

Get Unlimited Answers
QUESTION:

According to the theory of liquidity preference, an economy’s interest rate adjusts

a. to balance the supply and demand for loanable funds.

b. to balance the supply and demand for money.

c. one-for-one to changes in expected inflation.

d. to equal the interest rate prevailing in world financial markets.

Questions & Answers

QUESTION:

According to the theory of liquidity preference, an economy’s interest rate adjusts

a. to balance the supply and demand for loanable funds.

b. to balance the supply and demand for money.

c. one-for-one to changes in expected inflation.

d. to equal the interest rate prevailing in world financial markets.

ANSWER:

Step 1 of 2

The following discusses the theory of liquidity preference and finds out which among the options an economy’s interest rate adjusts.

Add to cart

Watch The Answer!

Theory of Liquidity Preference: Interest Rate Adjustment
Stars

Want To Learn More? To watch the entire video and ALL of the videos in the series:

Add to cart

In this video, we explore the theory of liquidity preference, which focuses on how an economy's interest rate adjusts to balance supply and demand for money. We evaluate a multiple-choice question and discuss each option's alignment with various economic theories without revealing the correct answer.


Study Tools You Might Need

Not The Solution You Need? Search for Your Answer Here:

×

Login

Login or Sign up for access to all of our study tools and educational content!

Forgot password?
Register Now

×

Register

Sign up for access to all content on our site!

Or login if you already have an account

×

Reset password

If you have an active account we’ll send you an e-mail for password recovery

Or login if you have your password back