Final answer:
Milton Friedman's monetarist position advocated for limited government intervention and a steady money supply growth rate, contrasting with Keynes's support for active fiscal policy. This difference in views is crucial for understanding monetary policy's impact on inflation and unemployment, especially considering the fluctuating velocity of money experienced in the 1980s.
Step-by-step explanation:
The velocity of money is a concept in economics that refers to the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period. Milton Friedman's view on the velocity of money differs from that of John Maynard Keynes in the role government should play in the economy. Keynes believed in active government intervention to manage economic cycles, while Friedman, a monetarist, argued for a more limited government role, emphasizing a steady, predictable increase in the money supply. Jacob Clifford's video uses 'The Terminator' to demonstrate Friedman's views, suggesting that too much government intervention can lead to unpredictable and potentially damaging economic outcomes. The 1980s saw central banks shifting away from a constant money growth rate due to fluctuating velocity, which challenged the effectiveness of predicting economic outcomes based solely on money supply control.