According to the liquidity preference model, the supply and demand for money determine the interest rate.

Question

Quizplus · Accepted Answer

The liquidity preference model, developed by John Maynard Keynes, states that the interest rate is determined by the supply and demand for money in the economy. When there is a higher demand for money, the interest rate increases, and when there is a lower demand, the interest rate decreases. Therefore, the answer is true.

According to the Liquidity Preference Model, the Supply and Demand