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

question 43

Multiple Choice

Keynes's liquidity preference theory indicates that the demand for money

• A)is purely a function of income,and interest rates have no effect on the demand for money.
• B)is purely a function of interest rates,and income has no effect on the demand for money.
• C)is a function of both income and interest rates.
• D)is a function of both government spending and income.

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Definitions:

Purchases Discount

A reduction in price given by a seller to a buyer for paying an invoice within a specified time frame.

Early Payment

A payment made before its due date, often incentivized by discounts or to avoid interest charges.

Early Payment Discount

An incentive offered by sellers to buyers for paying their invoices before the due date, typically to accelerate cash flows.

Gross Profit

Gross profit is the difference between revenue and the cost of goods sold (COGS), representing the profit a company makes after deducting the costs directly associated with producing its goods or services.