CA Foundation P4 · Chapter 8 · Question 15 of 15
Milton Friedman's restatement of the quantity theory treats the demand for money as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Demand for a capital asset, depending on wealth and the returns on alternative assets
Explanation
Friedman regarded money as one form in which wealth is held. Demand for real balances depends on permanent income (wealth), the ratio of human to non-human wealth, expected returns on bonds, equities and physical goods (expected inflation), and tastes. This makes money demand a stable function.
More Money Market MCQs
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