In the Keynesian model, liquidity preference refers to the
A) demand for capital.
B) demand for consumer goods.
C) demand for money.
D) money supply.

Question

Quizplus · Accepted Answer

In the Keynesian model, liquidity preference refers to the demand for money, which is driven by individuals and firms' desire to hold cash as a form of liquid asset that can easily be used to purchase goods and services or make investments. The demand for money is related to the interest rate, where a higher interest rate reduces the demand for money and increases the demand for other assets such as bonds or stocks.

In the Keynesian Model, Liquidity Preference Refers to the