[{"data":1,"prerenderedAt":58},["ShallowReactive",2],{"term:liquidity-preference":3},{"term":4,"related":45},{"id":5,"title":6,"body":7,"category":27,"description":28,"extension":29,"faq":30,"meta":31,"navigation":32,"path":33,"related":34,"seo":38,"stem":39,"takeaways":40,"__hash__":44},"terms\u002Fterms\u002Fliquidity-preference.md","Liquidity Preference",{"type":8,"value":9,"toc":22},"minimark",[10,15,19],[11,12,14],"h2",{"id":13},"understanding-liquidity-preference","Understanding Liquidity Preference",[16,17,18],"p",{},"People hold money for transactions, as a precaution, and to wait for better investment opportunities. Holding money means giving up interest, so money demand falls as interest rates rise.",[16,20,21],{},"In Keynes's General Theory, the interest rate balances the desire to hold money (liquidity) with the money supply. It underlies the LM curve.",{"title":23,"searchDepth":24,"depth":24,"links":25},"",2,[26],{"id":13,"depth":24,"text":14},"economy","Keynes's theory that interest rates are set by the demand for and supply of money.","md",[],{},true,"\u002Fterms\u002Fliquidity-preference",[35,36,37],"is-lm-model","liquidity-trap","keynesian-economics",{"title":6,"description":28},"terms\u002Fliquidity-preference",[41,42,43],"The interest rate is the price of giving up liquidity.","Money demand falls as interest rates rise.","It is the basis of the LM curve.","mImdZWIdpbq6c0VgP5xYu7h-gG9Tt1UUHpbceb2nZbc",[46,50,54],{"title":47,"description":48,"path":49},"IS–LM Model","A model of how interest rates and output are jointly set by the goods market and the money market.","\u002Fterms\u002Fis-lm-model",{"title":51,"description":52,"path":53},"Keynesian Economics","The school of thought that total demand drives output and employment in the short run, and that policy can stabilize it.","\u002Fterms\u002Fkeynesian-economics",{"title":55,"description":56,"path":57},"Liquidity Trap","A situation where interest rates are so low that monetary policy loses its usual power to boost spending.","\u002Fterms\u002Fliquidity-trap",1793374005360]