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Macroeconomics: Theory and Policy by Vanita Agarwal

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15

Demand for Money: The Post-Keynesian Approach

After studying this topic, you should be able to understand

  • The post Keynesian theories like the portfolio theories lay emphasis on the store of value function of money.
  • The transactions theories lay more emphasis on the medium of exchange function of money.
  • The Baumol-Tobin model of transactions demand for money lays stress on the fact that the holding of money by the individual transactor in his asset portfolio involves both a cost and a benefit.
  • Friedman’s theory of demand for money is partly Keynesian and partly non-Keynesian.
  • Friedman ignores the motives for holding money and takes it for granted that people will certainly hold money.
INTRODUCTION

As already discussed in Chapter 14 that ...

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