This inertia of the business men gave Keynes food for thought and helped him
propound the Liquidity Preference Theory of interest. 12. He said that during a
depression period the expectations of the business men are very gloomy. It is a
period of falling prices. The expected rate of profit (which he called the Marginal
Efficiency of Capital, and which he defined as a ratio between the prospective
yield of a capital asset and the cost of producing that asset) is very low in this
period.
(Peeters 1961)
(Peeters 1961)
(Peeters 1961)
(Peeters 1961)
