Summarize the threemotives underlyingthe liquidity preference theory of moneydemand

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Summarize the three
motives underlying
the liquidity preference theory of money
demand

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The Liquidity Preference(LP) Theory of money demand for money states that the money's demand is not to borrow money but the main desire is to remain liquid. The theory is formulated by JM Keynes to describe the role of the rate of interest through the demand and supply of money. As per Keynes, money is demanded 3 purposes including Transactionary motive, Precautionary and Speculative motive. Keynes believed that the most liquid asset is money and the more quickly an asset can be transferred into cash, the more liquid it would be. 

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