Marcus Is of the Opinion That the Theory of Liquidity

question 99

Multiple Choice

Marcus is of the opinion that the theory of liquidity preference explains the determination of the interest rate very well.Most economists would say that Marcus's opinion is

• A)Keynesian in nature,and that his view is more valid for the long run than for the short run.
• B)classical in nature,and that his view is more valid for the long run than for the short run.
• C)Keynesian in nature,and that his view is more valid for the short run than for the long run.
• D)classical in nature,and that his view is more valid for the short run than for the long run.

---

Definitions:

Interest Rates

The cost of borrowing money or the return on invested capital, typically expressed as a percentage of the principal amount on an annual basis.

Yield To Maturity

The total anticipated return on a bond if the bond is held until the date it matures, assuming all payments are made as scheduled.

Yield To Maturity

The expected total yield on a bond when held until the expiration of its term.

Coupon Rate

The yearly rate of return on a bond, shown as a percentage of its nominal worth.