Explain Why Friedman Believed That the Demand for Money Was

question 72

Essay

Explain why Friedman believed that the demand for money was not very sensitive to interest rates even the returns on stocks, bonds and money appear in his demand function.

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Definitions:

Compensating Differentials

Wage differentials that arise to compensate workers for the desirability or undesirability of a job's characteristics.

Job Characteristics

Encompass the attributes, roles, responsibilities, and overall environment of a particular job that influence the job holder's motivation and satisfaction levels.

Human Capital

Human capital refers to the set of skills, knowledge, abilities, and attributes embodied in individuals that can be utilized to create economic value.

Financial Assets

Financial assets are intangible assets representing ownership of value, such as stocks, bonds, or bank deposits.