Business, 17.09.2019 23:20 hePandaKing6909

In his liquidity preference framework, keynes assumed that money has a zero rate of return; thus
a) when interest rates rise, the expected return on money falls relative to the expected return on bonds, causing the demand for money to fall.
b) when interest rates rise, the expected return on money falls relative to the expected return on bonds, causing the demand for money to rise.
c) when interest rates fall, the expected return on money falls relative to the expected return on bonds, causing the demand for money to fall.
d) when interest rates fall, the expected return on money falls relative to the expected return on bonds, causing the demand for money to rise.

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In his liquidity preference framework, keynes assumed that money has a zero rate of return; thus

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