There’s nothing new about “modern monetary theory.”And, actually, a lot of it is true. The Classical Theory Of Interest Rate. Interest theory in the twentieth century Irving Fisher, Frank Fetter, Keynesians, modern quantitativists or monetarists (Milton Friedman), Austrians (Ludwig von … But this wonky debate has now spilled over into the policy world, and there are politicians who seem to be falling under the lure that deficits don’t matter. But we have seen that all these theories suffer from various drawbacks and are indeterminate. (Herman Heinrich Gossen 1810-1858) Lliquidity theory explains the interest rate on the role of money (demand and supply). (Friedrich von Wieser, 1851-1926) Neo classical theory explains the interest rate laws diminishing marginal utility. “Modern Monetary Theory” (or MMT) is a new approach to monetary policy that advocates argue justifies massive government spending programs, including “Medicare for All” and the “Green New Deal.”But what is MMT, exactly?The core proposition of MMT is that a government that issues its own currency can always fund itself with that currency. The Modern Theory is the integration of valuable concepts of the classical models with the social and behavioral sciences. The Modern Theory of Interest is designated as IS-LM Curves Model. MODERN THEORY OF INTEREST: HICKS-HANSEN SYNTHESIS We have discussed above the various theories of the rate of interest put forward from time to lime. This heterodox theory, which proposes a rethinking of how public finance works, has few fans among academic economists. Modern Monetary Theory, or MMT, has been a hot topic of late. The supply of capital is administered by the time preference and output of capital is based on savings, waiting or thrift. As the classical thesis, rate of interest is ascertained by the supply of and demand for capital. Benefits of Modern Portfolio Theory (MPT) MPT is a useful tool for investors trying to build diversified portfolios. Hicks-Hansen's, IS-IM curves model seeks to explain a case of joint determination of equilibrium rate of interest (r) and equilibrium level of income (y). This theory posits that an organization is the system that changes with the change in its environment, both internal and external. ... #1 – The Expectations Theory/Pure Expectations Theory. Modern economics also looks at items such as the role of demand, money supply, and its effect on growth or monetarism and free trade.In some ways, modern economic theory is a much more … Theory of Austrian School explains the interest rate the law of marginal utility of goods. 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