THE CURRENT SIGNIFICANCE OF LIQUIDITY PREFERENCE.

The article introduces the topic on the significance of liquidity preference doctrine which has been subject to criticism as being inadequate to explain the long-term rate of interest. The war has resulted in the increase in money supply and in the increase of idle balances, as one of the major monetary problems. Liquidity preference, which is used for analysis of idle balances, prevents entrepreneurs from obtaining the funds required for high level investments in the face of a low marginal efficiency of capital.