1.  The demand for narrow money will fall, but the demand for broad money will remain the same.

2.  Thus it is the demand for time deposits, and hence broad money, that varies with speculative demand and hence interest rates.

3.  The demand for narrow money is less interest elastic than the demand for broad money.

4.  The transactions-plus-precautionary demand for narrow money is more interest elastic than for broad money.

5.  The monetarist assumption is that the velocity of circulation of broad money is more or less constant.

6.  The essential point to note is that broad money recorded increases significantly above their target limits in most years.

7.  This fall in the velocity of circulation of broad money may be explained in terms of several factors.