Question: Suppose that consumers are concerned about theft and so they

Suppose that consumers are concerned about theft, and so they are willing to use banks for some of their transactions even if the nominal interest rate is zero. Further, suppose that, the more currency consumers hold, the more people are encouraged to steal, as theft is now more profitable. How would the Friedman rule for monetary policy be altered under these circumstances?


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  • CreatedDecember 05, 2014
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