Tag Archives | liquidity

The liquidity preference theory of interest explained

The liquidity preference theory of interest explained. Liquidity means shift ability without loss. It refers to easy convertibility. Money is the most liquid assets. Money commands universal acceptability. Everybody likes to hold assets in form of cash money.

Brief note on Liquidity Preference Theory of Interest

The liquidity preference theory of Interest has been propounded by J.M. Keynes. According to him, “Interest is the reward for parting with liquidity.” In the words of Keynes interest is a monetary phenomenon. Liquidity means the convenience of holding cash.

What are the features of Monetary Economy ?

Some of the most important features of Monetary Economy are Money is generally accepted as a medium of exchange, monetary economy has greater liquidity than the barter economy has and In a monetary economy, individuals also use money as an asset.

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