According to the Liquidity Preference Theory,the Demand for Money Is

question 85

Multiple Choice

According to the liquidity preference theory,the demand for money is ________ related to aggregate output and ________ related to interest rates.

• A)negatively;negatively
• B)negatively;positively
• C)positively;negatively
• D)positively;positively

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Definitions:

NPV

Net Present Value, a financial metric used to assess the profitability of an investment, calculated as the difference between the present value of cash inflows and outflows.

IRR

Internal Rate of Return is a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Mutually Exclusive

Describes options or projects that cannot both be chosen such that if one is selected, the other must be rejected.

Value Foregone

The potential value lost when choosing one investment or action over another, often considered an opportunity cost.