(i) Liquidity preference theory does not explain the existence of different interest rates prevailing in the market.
(ii) It explains interest only in the short run.

(i) The transaction motive
(ii) The precautionary motive.
(iii) The speculative motive

The demand for loanable funds depend upon the following:
(i) Demand for Investment (I)
(ii) Demand for Consumption (C)
(iii) Demand for Hoarding (H)

(i) The subsistence theory of wages.
(ii) The standard of living theory of wages.
(iii) The wage fund theory of wages.
(iv) The residual claimant theory of wages.
(v) Marginal productivity theory of wages.

(i) Wage is the price paid to the labourer for the services rendered.
(ii) Wage may be paid daily, weekly and monthly etc.

(i) Rent is the difference between the actual earnings of a factor of production and its transfer earning.
(ii) \(\boxed{Rent=Actual\ earning-Transfer\ earning.}\)
(iii) The minimum payment that has to be made to a particular factor of production to retain it in its present use is known as transfer of earning.

Marginal Productivity of Theory of Distribution

(i) Functional distribution means the distribution of income among the four factors of production.
(ii) The four factors of production are land, labour, capital and organisation.

Liquidity preference means the preference of the people to hold wealth in the form of liquid cash rather than in non-liquid assets like bonds, securities, gold, building.

(i) Profit is earned by the entrepreneur for his entrepreneurial function.
(ii) It is the amount left with the entrepreneur after he has paid for all the other factors.

(i) Interest is a payment made by a borrower to the lender for the money borrowed.
(ii) It is the price paid for the use of capital.

(i) Nominal or money wages are the wages paid in terms of money.
(ii) Real wages are the wages paid in terms of goods & services.

Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil" David Ricardo.

Personal distribution - the distribution of national income among individuals.
Functional distribution - the distribution of income among four factors of production.

Distribution means division of income among the four factors of production in terms of rent to landlords, wage to labourer, interest to capital and profit to entrepreneurs.