According to Keynes' Liquidity Preference Theory, what is the primary reason for the speculative demand for money?

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Economics · Macroeconomics

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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The expectation of a future fall in the bond price (or rise in the interest rate), encouraging people to hold more cash.

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Answer 1

The expectation of a future fall in the bond price (or rise in the interest rate), encouraging people to hold more cash.

Answer 2

The expectation of a future rise in the bond price, encouraging people to hold more bonds.

Answer 3

The need to maintain a reserve for unforeseen future expenses.

Answer 4

The desire to hold cash for day-to-day transactions.

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