When comparing the loanable funds and liquidity preference frameworks of interest rate determination,which of the following is true?
A) The liquidity preference framework is easier to use when analyzing the effects of changes in expected inflation.
B) The loanable funds framework provides a simpler analysis of the effects of changes in income, the price level, and the supply of money.
C) In most instances, the two approaches to interest rate determination yield the same predictions.
D) All of the above are true.
E) Only A and B of the above are true.

Question

Quizplus · Accepted Answer

Both frameworks generally yield the same predictions regarding interest rate determination, despite their different approaches.

When Comparing the Loanable Funds and Liquidity Preference Frameworks of Interest