Monetarists

Monetarists - Monetarists views i) Demand for money: The...

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Monetarists’ views i) Demand for money: The classical viewpoint in opposition to the Keynesian analysis has been put forth in the recent past by the monetarists. After 1954, Professor Milton Friedman and his followers have repeatedly contributed to such monetarist arguments. Their views are significantly modified and more realistic than the traditional rigid outlook. Before arriving at their reaction to monetary policy, it would be appropriate to consider the demand for money. Demand for money is the opposite of the velocity of circulation of money. It is the reciprocal of velocity in its value. If (V) is velocity and (d) is demand for money then, This is an obvious relationship. Velocity is speed or frequency of rotating units of money and its value can be increased only by restricting spending. An individual possessing a $100 bill can either spend it or hold a part of it. If he spends $90, he can only hold $10 of it. But if he spends $70 he can hold only $30 in cash. Therefore spending
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This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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Monetarists - Monetarists views i) Demand for money: The...

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