Marcus is of the opinion that the theory of liquidity preference explains the determination of the interest rate very well.Most economists would say that Marcus's opinion is
A)Keynesian in nature,and that his view is more valid for the long run than for the short run.
B)classical in nature,and that his view is more valid for the long run than for the short run.
C)Keynesian in nature,and that his view is more valid for the short run than for the long run.
D)classical in nature,and that his view is more valid for the short run than for the long run.

Question

Quizplus · Accepted Answer

Marcus's opinion aligns with the Keynesian theory of liquidity preference, which suggests that the interest rate is determined by the demand for and supply of money. This view is more applicable to the short run, where changes in liquidity preferences and demand for money can have a significant impact on interest rates. In the long run, classical economists argue that interest rates will be determined by real factors such as productivity and saving, and not just by monetary factors like liquidity preferences.

Marcus Is of the Opinion That the Theory of Liquidity