According to Milton Friedman,income declines relative to permanent income during a business cycle contraction,causing the demand for money relative to actual income to increase,thereby causing velocity to

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According to Milton Friedman, during a business cycle contraction, income declines relative to permanent income. As a result, the demand for money relative to actual income increases, leading to a decrease in velocity. This is because people tend to hold onto their money more in uncertain economic times, causing a slowdown in the circulation of money. It is not dependent on interest rates and assuming that interest rates increase during an economic contraction is not necessarily true.

According to Milton Friedman,income Declines Relative to Permanent Income During