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21.3 Keynes's Liquidity Preference Theory
The Keynesian theory of money demand emphasizes the importance of ____.
A) a constant velocity
B) irrational behavior on the part of some economic agents
C) interest rates on the demand for money
D) expectations
Answer: C
Diff: 2 Type: MC Page Ref: 533
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money
Keynes hypothesized that the transactions component of money demand was primarily
determined by the level of ____.
A) interest rates
B) velocity
C) income
D) stock market prices
Answer: C
Diff: 2 Type: MC Page Ref: 533
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money
Keynes argued that the transactions component of the demand for money was primarily
determined by the level of people's ____, which he believed were proportional to ____.
A) transactions; income
B) transactions; age
C) incomes; wealth
D) incomes; age
Answer: A
Diff: 2 Type: MC Page Ref: 533
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money
Keynes hypothesized that the precautionary component of money demand was primarily
determined by the level of ____.
A) interest rates
B) velocity
C) income
D) stock market prices
Answer: C
Diff: 2 Type: MC Page Ref: 533
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money