Question : The Liquidity Preference Theory of Interest was propounded by :
Option 1: J. M. Keynes
Option 2: David Ricardo
Option 3: Alfred Marshall
Option 4: Adam Smith
Correct Answer: J. M. Keynes
Solution : The correct option is J. M. Keynes.
Keynes first proposed the Liquidity Preference Theory of Interest. This fundamental idea of Keynesian economics contends that the supply and demand for money in an economy control the interest rate. Keynes argued that people store money for transactions as well as for safety and speculation.
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