For Friedman, the money-demand function was highly stable. This made the moneyincome multiplier highly stable, so that
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For Friedman, the money-demand function was highly stable. This made the moneyincome multiplier highly stable, so that changes in the money supply had a strong impact on nominal national income. What were Friedman’s reasons for his assertion on the stability of money demand?
Has the money demand function in recent years been stable in the sense of not possessing the type of volatility asserted by Keynes? Discuss.
In many economies in recent decades, the money-demand function has shifted over time due to financial innovations. Have these shifts invalidated Friedman’s assertion, or is this instability of a different kind from what Friedman and Keynes had in mind?
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