The effects of the interest rate in the short run are usually best shown using which theory?
A)either liquidity preference theory or classical theory
B)neither liquidity preference theory or classical theory
C)only liquidity preference theory
D)only classical theory

Question

Quizplus · Accepted Answer

The liquidity preference theory, developed by John Maynard Keynes, is used to explain interest rate determination in the short run, focusing on the supply and demand for money.

The Effects of the Interest Rate in the Short Run