Ask Question
BusinessBusiness
11 September, 20:33

Because the liquidity-preference framework focuses on the:

a. short run, it assumes the price level adjusts to bring the money market to equilibrium.

b. short run, it assumes the interest rate adjusts to bring the money market to equilibrium.

c. long run, it assumes the price level adjusts to bring the money market to equilibrium.

d. long run, it assumes the interest rate adjusts to bring the money market to equilibrium.

+3
Answers (1)
  1. 11 September, 21:49
    0
    B. Short run, it assumes the interest rate adjusts to bring the money market to equilibrium

    Explanation:

    This theory is explained to be a model that suggests that an investor should demand a higher interest rate or premium on securities with long-term maturities that carry greater risk because, all other factors being equal, investors prefer cash or other highly liquid holdings.

    According to this theory, which was developed by John Maynard Keynes in support of his idea that the demand for liquidity holds speculative power, investments that are more liquid are easier to cash in for full value. Cash is commonly accepted as the most liquid asset. According to the liquidity preference theory, interest rates on short-term securities are lower because investors are not sacrificing liquidity for greater time frames than medium or longer-term securities.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Because the liquidity-preference framework focuses on the: a. short run, it assumes the price level adjusts to bring the money market to ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Which of the following is a correct definition of a concept related to partnership taxation? Group of answer choices The aggregate concept treats partners and partnerships as separate units and gives the partnership its own tax ""personality.
Answers (1)
National saving is made up of two components: public saving and private saving. National income/output (Y), private consumption (C), government spending (G), and government taxes (T) can be used to calculate national saving (S).
Answers (1)
On July 15, 2021, the Nixon Car Company purchased 2,600 tires from the Harwell Company for $35 each. The terms of the sale were 2/10, n/30. Nixon uses a perpetual inventory system and the gross method of accounting for purchase discounts.
Answers (1)
If you choose to apply a herbicide on difficult to control broadleaved weeds, then make sure the product contains what active ingredient?
Answers (1)
Though it is seen as a last resort, bankruptcy allows a consumer to temporarily stop paying debts. eliminate certain types of debt. easily reestablish good credit. receive credit in an emergency.
Answers (2)
New Questions in Business
Explain what is meant by market research.
Answers (1)
Jean, a restaurant critic, publishes a review in a national daily that the sandwiches served at his friend's deli are usually not fresh. Tom, the owner of the deli, notices a significant decrease in customers after the review gets published.
Answers (1)
Why did the Soviet Union experience many surpluses and shortfalls? A) The labor force wasn't well educated B) The cold climate made farming hard C) Central planners could not manage every detail D) The country depended on imports to obtain resources.
Answers (1)
A hospitality operation has sales revenue of $462,000 with variable cost averaging 44%. Fixed costs are $188,000. The owner wants a net income after tax of $50,400 based on a tax rate of 28%. a.
Answers (1)
True or false fdr was eager to use deficit spending to end the economic crisis.
Answers (1)
Home » Business » Because the liquidity-preference framework focuses on the: a. short run, it assumes the price level adjusts to bring the money market to equilibrium. b. short run, it assumes the interest rate adjusts to bring the money market to equilibrium. c.
Sign Up Forgot Password?