Friedman's Demand for Money Function Quiz
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Questions and Answers

According to Friedman's theory, money is primarily viewed as:

  • A durable consumer good held for the services it renders (correct)
  • A temporary means of exchange
  • An inflationary factor
  • A liability for the government

    • Friedman's theory of demand for money is influenced by which of the following factors?

  • Government policies, international trade, and business cycles
  • Interest rates, money supply, and technological advancements
  • Total wealth, relative price of assets, and wealth holder's preferences (correct)
  • Exchange rates, fiscal policies, and inflation expectations

    • The demand for money is assumed to depend on which of the following major factors?

  • Total wealth to be held in various forms of assets (correct)
  • Price level changes and interest rate differentials
  • Government expenditure and taxation policies
  • Technological advancements in banking systems

    • According to Friedman's theory, what influences the cost of holding cash balance?

    <p>The rate of interest and the expected rate of change in price level</p> Signup and view all the answers

    In Friedman's view, how does an increase in the stock of money held affect its value?

    <p>Its value tends to diminish relative to the services other assets are rendering</p> Signup and view all the answers

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