In Keynes's liquidity preference framework,individuals are assumed to hold their wealth in two forms
A)real assets and financial assets.
B)stocks and bonds.
C)money and bonds.
D)money and gold.

Question

Quizplus · Accepted Answer

In Keynes's liquidity preference framework, individuals are assumed to hold their wealth in the form of money and bonds. Money provides liquidity and immediate access to purchasing power, while bonds offer a higher return but are less liquid. Keynes argued that individuals' demand for money would depend on the interest rate, with higher interest rates leading to a lower demand for money and a greater demand for bonds.

In Keynes's Liquidity Preference Framework,individuals Are Assumed to Hold Their