Question

Interest rates have a larger impact on money demand in Keynes's view compared to Friedman's. True or false?

Answer 1

Interest rates have a larger impact on money demand in Keynes's view compared to Friedman's. True or false?

True

because

Friedman's perfect work of art think about A Monetary History of the United States, 1867-1960 persuaded him that they driver was money supply growth as opposed to interest rates. The two are normally associated, making troublesome the unraveling of the two impacts.

Here's a basic clarification of the Friedman rationale: when the Fed builds the measure of the money in the economy, individuals' portfolios turned out to be unequal. Consider three sorts of benefits: physical resources, for example, business gear or family unit effects; monetary resources, for example, stocks and securities; lastly money. An expansion in the money supply drives individuals to state, "I have excessively money with respect to my physical and budgetary resources." They spend the money. Yet, they don't take out the money when they spend it; they simply pass it along to another person. The portfolio irregularity proceeds until the point when the estimation of those different resources rises. Rising estimations of physical resources originates from more resources, or higher sticker prices on the advantages, which implies the economy is advancing. Rising qualities for monetary resources implies bring down interest rates and additionally all the more getting going on.