A paper that explains this concept in terms of risk aversion uses the word “plungers” for people who have linear or convex upward indifference curves. That paper by James Tobin is titled for this concept “as behavior towards risk.” The economist who theorized this concept argued that it is determined by the speculative motive, the precautionary motive, and the transactions motive. In the 1930s, it was widely debated whether a theory named for this concept was equivalent to the loanable funds theory. In a model partly named for this concept and developed by Hicks and Hansen, this concept is represented as a curve that decreases as the interest rate increases, with the equilibrium interest rate being the point where that curve intersects the money supply. For 10 points, what term referring to the tendency to hold easily convertible assets is the “L” in the IS–LM model? ■END■
ANSWER: liquidity preference [accept demand for money or monetary demand or demand for cash; accept “Liquidity Preference as Behavior Towards Risk”; prompt on liquidity]
<Social Science>
= Average correct buzz position