Theory of Interest SSK

In the Classical Theory, the equilibrium rate of interest is determined by:

• Demand and Supply of Funds

• Savings & Investment

• Supply and Demand of Money

• Demand and Supply of Goods

_____ is also known as demand and supply theory of interest.

• The Classical Theory

• The Loanable Fund Theory

• The Keynesian Theory

• Law of Supply and Demand

______ is a dynamic theory of interest.

• Classical Theory

• Loanable Funds Theory

• Keynesian Theory

• Supply and Demand Theory

All the following factors which are responsible for supply of the loanable funds, EXCEPT:

• Savings

• Dissaving

• Bank Money

• Disinvestment

_____ refers to the expenditure for the purchase of making of new capital goods including inventories.

• Investments

• Hoarding

• Dissaving

• Bank Money

______ occurs when the existing stock of capital is allowed to wear out without being replaced by new capital requirement.

• Savings

• Bank Money

• Disinvestment

• Dishoarding

Liquidity also known as _________________.

• how particular asset converted to cash

• price you pay to borrow money

• something containing economic value

• asset or store of value

Classical Theory of Interest was propounded by the economists like _______.

• Smith and Ricardo

• Knut Wicksell

• Marshall and Fisher

• Keynes

The neo-classical theory of interest or loanable funds theory of interest owes its origin to the Swedish economist ______.

• Smith and Ricardo

• Knut Wicksell

• Marshall and Fisher

• Keynes

________ is called the real theory of interest in the sense that it explains the determination of interest by analyzing the real factors like savings and investment.

• Keynesian Theory of Interest

• Classical Theory of Interest

• Neo-classical Loanable Funds Theory of Interest

• Fisher's Theory of Interest