Economy, asked by rocky2001, 5 months ago

according to friedman household demand money to have command over​

Answers

Answered by Anonymous
2

Explanation:

Friedman in his essay, “The Quantity Theory of Money—A Restatement” published in 1956 beautifully restated the old quantity theory of money. In his restatement he says that “money does matter”. For a better understanding and appreciation of Friedman’s modern quantity theory, it is necessary to state the major assumptions and beliefs of Friedman.

First of all Friedman says that his quantity theory is a theory of demand for money and not a theory of output, income or prices.

Answered by Pratham2508
0

Answer:

The classical quantity theory of money was brilliantly restated by Friedman in his 1956 article, "The Quantity Theory of Money—A Restatement." He states that "money does matter" in his restatement. The main presumptions and ideas of Friedman must be stated in order to fully comprehend and appreciate his current quantity theory.

First of all, according to Friedman, his quantity theory is not a theory of output, income, or prices, but rather a theory of the need for money.

Explanation:

  • Friedman claims that the quantity theory is first and foremost a theory of the desire for money in his reformulation of the concept.
  • It does not represent a theory of output, money income, or price level.
  • The ultimate wealth holders' demand for money is formal equivalent to the demand for a consumption service.
  • He sees the total quantity of actual cash balances (M/P) as a commodity that is in high demand since it provides benefits to the holder.
  • Therefore, money is a capital good or asset. The demand for money, therefore, contributes to the wealth or capital hypothesis.

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