Multiple choice

According to Milton Friedman, quantity theory of Money deals with:

  1. Prices

  2. Income

  3. Supply of money

  4. Demand for money
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Milton Friedman's restatement of the quantity theory of money focuses on the DEMAND for money as a stable function of permanent income, unlike earlier versions that emphasized money supply or price levels. Friedman argued that people hold money based on their long-term income expectations, wealth, and the relative returns on money vs other assets. This was a key innovation in monetary theory.

Keep practicing — related questions