7 Views

Question : Which of these statements is true?

Option 1: At lower rates of interest, people will have a lower preference for liquidity.

Option 2: At higher rates of interest transactions, demand for money will be higher.

Option 3: At lower rates of interest, speculative demand for money will be higher.

Option 4: At higher rates of interest, the liquidity preference of people will increase.


Team Careers360 4th Jan, 2024
Answer (1)
Team Careers360 11th Jan, 2024

Correct Answer: At lower rates of interest, speculative demand for money will be higher.


Solution : The correct option is At lower rates of interest, speculative demand for money will be higher .

According to the theory of liquidity preference proposed by J. M. Keynes, speculative demand for money is influenced by the prevailing interest rates. Specifically, when interest rates are lower, people tend to hold less money for transactions and more for speculative purposes.

How to crack SSC CHSL

Candidates can download this e-book to give a boost to thier preparation.

Download Now

Know More About

Related Questions

TOEFL ® Registrations 2024
Apply
Accepted by more than 11,000 universities in over 150 countries worldwide
Manipal Online M.Com Admissions
Apply
Apply for Online M.Com from Manipal University
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books