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Keynes's Liquidity Preference Theory Indicates That the Demand for Money

question 99

Multiple Choice

Keynes's liquidity preference theory indicates that the demand for money is ________ related to ________.


Definitions:

Price Appreciation

The increase in the value of an asset or investment over time, not including the dividends or interest earned.

Current Income

The total amount of money earned within a specific time period, including wages, dividends, and interest.

Clientele Effect

The theory suggesting that changes in dividend policy will attract a different class of shareholders or cause the current shareholders to sell their shares.

Residual Dividend Theory

The idea that corporations pay dividends with whatever money is left over out of earnings after all projects with a positive NPV are undertaken.

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