passwella.
Menu

JAMB Economics 2002 Question 18

Question 18

Money and Inflation

Liquidity preference refers to the

  1. A.need to borrow money for short periods to meet some temporary crises
  2. B.wish to hold more funds for precautionary purposes
  3. C.need to increase the money supply in order to lower the interest rate
  4. D.demand to hold money as assets rather than as stocks
Show the answer and explanation

Answer: D (demand to hold money as assets rather than as stocks)

Explanation

Liquidity preference is the desire to hold wealth in the form of money (cash) rather than in other assets such as stocks.