Keynes' liquidity preference theory relates the demand for money to: MCQ with Answer and Explanation

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Keynes' liquidity preference theory relates the demand for money to:

A. interest rate and income

B. prices only

C. exchange rate

D. income only

Answer: Option A

Solution (By JKSSB Mock Tests)

Liquidity preference theory says money demand depends on income and the interest rate.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'FDI' in single brand retail is allowed up to what percentage?

A. 49%

B. 100%

C. 51%

D. 74%

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Correct Answer: Option B

Explanation:
FDI in single brand retail is allowed up to 100%.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on demerit goods is generally:

A. 12%

B. 28% plus cess

C. 18%

D. 5%

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Correct Answer: Option B

Explanation:
Demerit goods like tobacco and aerated drinks attract 28% plus cess.

This question belongs to: Economy GK Economy Set 1

Question #3

The concept of 'Sudden Stop' in international finance refers to:

A. Only a stop in trade flows

B. An abrupt reversal of capital inflows into a country

C. Only a stop in domestic investment

D. A gradual reduction in capital flows

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Correct Answer: Option B

Explanation:
A sudden stop is a large and abrupt reversal of capital inflows, often associated with currency crises, output collapses and balance-sheet problems in emerging markets.

This question belongs to: Economy GK Economy Set 1

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