According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will: | Faculties

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Ranjeet

🎓 Tutor III ⭐ 34.60K Points

📊 Financial Markets and Institutions

Q. According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:

(A) Decrease output and employment
(B) Increase risk aversion
(C) Reduce the demand for money
(D) Raise interest rates

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✅ Correct Answer: (D) Raise interest rates

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