The liquidity preference theory holds that interest rates are determined by the:
A)supply of and demand for liquids such as oil
B)supply of and demand for better returns
C)"flow" of funds over time
D)"flow" of bank credit over time
E)none of the above

Question

Quizplus · Accepted Answer

The liquidity preference theory, proposed by John Maynard Keynes, suggests that interest rates are determined by the supply and demand for money, not by any of the options listed.

The Liquidity Preference Theory Holds That Interest Rates Are Determined