Abstract
JN an article in thisREVIEW in I947, James Tobin' investigated the relationship between interest rates and the quantity of money in this country for the period I9I9-47. His results appeared to conform extremely well to the Keynesian liquidity-preference hypothesis which asserts that the demand for idle balances is a decreasing function of the interest rate, and that the interest-elasticity of demand for idle balances approaches infinity as the interest rate approaches its institutional floor. Tobin's data are shown as the dots in the graph in Chart i.
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