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Discuss the Keynes’s monetary Theory of Interest.

Discuss the Keynes’s monetary Theory of Interest.

Answers


sharon
In Keynes’s analysis, it was the demand for and supply of money that were important
in determining the market rate of interest and not as the classical economists
supposed the interaction of saving and investment schedule.
Keynes combined the speculative demand for money with the portion of the money
supply that would be used by household for speculative purposes to determine the
market rate of interest.
ma11420191534.png
ma11420191538.png
Thus the equilibrium market rate of interest was determined by the interaction of the
speculative money demand and the money supply for speculative purpose as shown in the
figure below.
ma11420191541.png
sharon kalunda answered the question on April 11, 2019 at 12:42

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