Consumer’s preference
Producer’s preference
Liquidity preference
State Bank’s preference
✅ The correct answer is C.
According to Keynes, interest is a payment for Liquidity preference. The Liquidity Preference Theory says that the demand for money is not to borrow money but the desire to remain liquid. In other words, the interest rate is the ‘price’ for money.
According to Keynes, interest is a payment for Liquidity preference. The Liquidity Preference Theory says that the demand for money is not to borrow money but the desire to remain liquid. In other words, the interest rate is the ‘price’ for money.