Q174
According to Keynes, interest is a payment for
A.
Consumer's preference
B.
Producer's preference
C.
Liquidity preference
AnswerD.
State Bank's preference
Answer: Option C
Solution
Answer: Option C
Solution:
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.