In Keynes's Liquidity Preference Framework

question 19

Multiple Choice

In Keynes's liquidity preference framework

• A)the demand for bonds must equal the supply of money.
• B)the demand for money must equal the supply of bonds.
• C)an excess demand of bonds implies an excess demand for money.
• D)an excess supply of bonds implies an excess demand for money.

Understand the evidence of emotional reactions without deliberate rational thinking.

Understand the concept of the endowment effect in behavioral economics.

Recognize how prospect theory explains human behavior towards risks and rewards.

Identify the influence of anchoring on decision-making.

---

Definitions:

Environmental Problems

Issues affecting the natural environment, often caused by human activity, such as pollution, climate change, and biodiversity loss.

Property Rights

Legal rights that delineate the ownership and utilization of resources, including the right to transfer, use, or exclude others from use.

Profit Maximization

The process by which a business seeks to achieve the greatest possible profit with the least possible cost and risk.

Industrial Waste

Waste produced by industrial activities, including chemicals and by-products that can be hazardous to the environment and human health.