Which of the following asserts that there is a speculative demand for money in which the quantity demanded of money is inversely related to the interest rate?

Question

Quizplus · Accepted Answer

This statement describes Keynes' liquidity preference theory, which asserts that people hold money not only for transactional purposes but also as a speculative asset. The theory argues that the demand for money is inversely related to the interest rate because as interest rates increase, the opportunity cost of holding money (instead of earning interest on other assets) also increases, leading to a decrease in the demand for money.

Which of the Following Asserts That There Is a Speculative