In Keynes's liquidity preference framework,as the expected return on bonds increases (holding everything else unchanged),the expected return on money ________,causing the demand for ________ to fall.
A)falls;bonds
B)falls;money
C)rises;bonds
D)rises;money

Question

Quizplus · Accepted Answer

In Keynes's liquidity preference framework, as the expected return on bonds increases, the relative attractiveness of holding money (which essentially has a return of zero) decreases. This makes money less appealing compared to bonds, leading to a fall in the demand for money.

In Keynes's Liquidity Preference Framework,as the Expected Return on Bonds