{"id":48719,"date":"2024-04-15T22:45:20","date_gmt":"2024-04-15T22:45:20","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=48719"},"modified":"2024-04-15T22:45:20","modified_gmt":"2024-04-15T22:45:20","slug":"by-what-name-the-modern-theory-of-interest-is-known","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/by-what-name-the-modern-theory-of-interest-is-known\/","title":{"rendered":"By what name, the modern theory of interest is known?"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a97ddf9bb575\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    Keynes theory of interest                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    New established theory of interest                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    Hicks Henson&#039;s theory of interest                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"true\">\r\n                    Marginal productivity theory                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>D. Marginal productivity theory<\/strong>.<\/p>\n<p>The marginal productivity theory of interest is a theory of interest that states that the interest rate is determined by the marginal productivity of capital. In other words, the interest rate is the rate of return that an investor expects to earn on a loan or investment. The higher the marginal productivity of capital, the higher the interest rate will be.<\/p>\n<p>The marginal productivity theory of interest is based on the idea that capital is a factor of production, just like labor and land. Capital is productive in the sense that it can be used to produce goods and services. The marginal productivity <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> of capital is the additional output that is produced when one more unit of capital is used.<\/p>\n<p>The marginal productivity theory of interest is a useful tool for understanding the determination of interest rates. It can be used to explain why interest rates are higher in some countries than in others, and why <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> interest rates are higher for some types of loans than for others.<\/p>\n<p>The other options are incorrect because they are not theories of interest.<\/p>\n<ul>\n<li><strong>Keynes theory of interest<\/strong> is a theory of interest that was developed by John Maynard Keynes. Keynes argued that the interest rate is determined by the liquidity preference of individuals and the supply of money.<\/li>\n<li><strong>New established theory of interest<\/strong> is not a well-defined theory. It is possible that the question is referring to the <strong>loanable funds theory of interest<\/strong>, which is a theory of interest that states that the interest rate is determined by the supply and demand for loanable funds.<\/li>\n<li><strong>Hicks Henson&#8217;s theory of interest<\/strong> is not a well-defined theory. It is possible that the question is referring to the <strong>Hicks-Hansen IS-LM model<\/strong>, which is a model of the macroeconomy that shows the relationship between interest rates and output.<\/li>\n<\/ul>\n<p>I hope this helps! Let me know if you have any other questions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>By what name, the modern theory of interest is known?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/by-what-name-the-modern-theory-of-interest-is-known\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"By what name, the modern theory of interest is known?\" \/>\n<meta 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