In my economics lectures, we are going through Keynes vs Friedman. As far as I got we have a downward sloping IS curve in the IS-LM model. We get this curve from the Keynesian cross when the rate of interest decrease and plant expenditure/investment increase and thus output grows. However, my lecturer also mentioned Keynes trying to criticize monetarism says that IS curve can be perfectly inelastic, therefore outward shift in LM won't affect the output much but will reduce the interest rate, whereas Friedman side has IS curve as usual downward sloping, thus making investors interest rate elastic. How is this possible? Seems like I am missing something, could you help?
What are the general assumptions about interest rate in a restatement of Quantity Theory of Money by Friedman? and what are the assumptions that Keynes made regarding interest rate?
