According to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will the demand for real money balances and will the interest rate.

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27-06-2022
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According to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will the demand for real money balances and will the interest rate.

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ayokenny2001 ayokenny2001 · Answer 1 · 2022-06-29T14:40:27+02:00

According to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will increase the demand for real money balances and will decrease the interest rate.

What is theory of liquidity preference?

In line with the liquidity preference theory, it is state that interest rates are determined by the supply and demand of money.

It is to be noted that tightening the money supply will decrease the nominal interest rates.

Hence, according to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will increase the demand for real money balances and will decrease the interest rate.

Learn more about theory of liquidity preference here : https://brainly.com/question/14280685

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According to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will ______ the demand for real money balances and will ______ the interest rate.

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What is theory of liquidity preference?

Otras preguntas

According to the theory of liquidity preference, holding the supply of real money balances constant, an increase in income will the demand for real money balances and will the interest rate.