Asked by
Red Head Realtor
on Dec 02, 2024
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The liquidity preference theory says that the yield curve should be upward sloping because lenders generally prefer long-term loans.
Liquidity Preference Theory
A theory that suggests interest rates are determined by the supply and demand for money, with people preferring liquidity over committing to long-term investments.
Upward Sloping
A term that describes a line or curve on a graph that shows an increase in a variable in relation to another variable as you move from left to right.
- Master the key theories and dynamics that underlie the structural configuration of interest rates and the curve of yields.
Verified Answer
SP
Learning Objectives
- Master the key theories and dynamics that underlie the structural configuration of interest rates and the curve of yields.