TERMIUM Plus®

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LIQUIDITY-PREFERENCE CURVE [1 record]

Record 1 2010-04-21

English

Subject field(s)
  • Econometrics
  • Currency and Foreign Exchange
CONT

(...) it does not emphasize what can happen in severe depression when the liquidity-preference curve is practically horizontal because interest rates are already so low that people are quite indifferent whether they hold M or the near-M government Treasury Bills that the Fed wants to swap for M.

OBS

for "liquidity-preference schedule" : The so-called "liquidity-preference schedule" of Fig. 18-1 (a) summarizes how an increase in M resulting from monetary policy (open-market purchases, etc.) leads initially to a reduced interest rate - from A's 6 per cent to B's 4 per cent.

French

Domaine(s)
  • Économétrie
  • Politique monétaire et marché des changes

Spanish

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