liquidity preference

Meanings

• noun

  The desire or willingness of investors to hold cash or near-cash assets rather than invest in securities or other financial instruments.

  - "The liquidity preference of investors increased during the financial crisis."
  - "Central banks can influence the economy by adjusting interest rates to alter the liquidity preference of investors."

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Variants

List of all variants of liquidity preference that leads to same result
preference , preferences , sexual preference , sexual preferences , veterans' preference , veterans' preferences , in preference to

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Etymology

origin and the way in which meanings have changed throughout history.

The term 'liquidity preference' was introduced by John Maynard Keynes in his book 'The General Theory of Employment, Interest and Money' (1936).

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Trivia

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1. John Maynard Keynes introduced the concept of 'liquidity preference' as a way to explain the causes of unemployment and the role of monetary policy in the economy.

2. The liquidity preference curve shows the relationship between interest rates and the demand for money, which is a key concept in modern macroeconomics.

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Related Concepts

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1. Interest rate: Interest rate is closely related to liquidity preference as it affects the opportunity cost of holding cash versus investing in securities.

2. Monetary policy: Monetary policy is a tool used by central banks to influence the economy by adjusting interest rates and other measures to affect the liquidity preference of investors.

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Culture

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Liquidity preference has been a key concept in macroeconomics since the work of John Maynard Keynes. It is often discussed in the context of monetary policy and interest rates.

How to Memorize "liquidity preference"

1. visualize
   

   - Imagine a graph showing the relationship between interest rates and the demand for money, which represents liquidity preference.

2. associate
   

   - Associate the term 'liquidity preference' with the idea of investors' willingness to hold cash instead of investing in securities.

3. mnemonics
   

   - Remember the acronym 'L-P' for 'Liquidity Preference'.

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