In this article we will discuss about the classical theory of interest with its criticisms. According to the classical theory, rate of interest is determined by the supply of and demand for capital. The supply of capital is governed by the time preference and the demand for capital by the expected productivity of capital. Both […]
The Classical Theory of Interest (With Criticisms)
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The Loanable Funds Theory of Interest (With Criticisms)
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In this article we will discuss about the loanable funds theory of interest with its criticisms. The neo-classical or the loanable funds theory explains the determination of interest in terms of demand and supply of loanable funds or credit. According to this theory, the rate of interest is the price of credit, which is determined […]
The Modern Theory of Interest (With Criticisms)
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In this article we will discuss about the modern theory of interest with its criticisms. An adequate theory to be determinate must take into consideration both the real and monetary factors that influence the interest rate. Hicks has utilized the Keynesian tools in a method of presentation which shows that productivity, thrift, liquidity preference and […]
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