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Differences of monetary schools
First of all, Keynes pointed out that the change of money supply has a substantial impact on national income. As a result of money increase, interest rate will decrease, thus increasing investment. Total demand and total income (Y) will change through multiplier effect, that is, △ M →△ R →△ I →△ Y. Therefore, the increase of money supply can lead to the increase of actual output, and money is non-neutral. Friedman pointed out that the change of money supply can only affect the actual output in the short term; In the long run, the change of money supply can only affect nominal variables but not real variables, so money is neutral in the long run.

Secondly, Keynes paid attention to market assets and market interest rates in a narrow sense, and his transmission channel was mainly the adjustment of financial assets in the money market. The increased amount of money is absorbed through two channels: first, the demand for currency trading increases after the increase of money income; Second, after the interest rate fell, the demand for currency speculation increased. Friedman pointed out that we should consider assets and interest rates in a broad sense, that is to say, there are many transmission channels, which can be carried out simultaneously in the money market and commodity market, and absorb too much money through the general rise in prices.

Thirdly, Keynes attached great importance to the role of interest rate, pointing out that interest rate is the central link of transmission mechanism. The change of money quantity first causes the change of interest rate, and the balance between money supply and demand and the overall economy is adjusted through the change of interest rate. Friedman, on the other hand, attaches importance to the role of income and expenditure in transmission, pointing out that individuals mainly decide their cash holdings according to their income. Therefore, the balance of money supply and demand can only be adjusted by expenditure. However, there is an unsynchronized relationship between money quantity and interest rate. Friedman believes that when the money growth accelerates, interest rates will be lowered at first, but later, because it increases expenditure to stimulate price increases, this will lead to an increase in loan demand, which will lead to an increase in interest rates. Because of this, interest rate cannot be the main axis in the transmission mechanism, but it is often an indicator that misleads monetary policy. Therefore, Friedman not only ignored the role of interest rate in the transmission mechanism, but also resolutely opposed using interest rate as a guide to formulating monetary policy.