Question

Discuss the views of friedman on demand for money.

Answer 1

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.

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