This paper was delivered in December 1967 as Friedman's presidential address to the American Economic Association, which explains the full-page portrait that precedes the text.
The "liquidity preference schedule" is Keynes's term for the relationship between the demand for money and the nominal interest rate.
Friedman's definition of the "natural rate of unemployment" on page 8 introduced this term to macroeconomics.
Much of the first five pages (up until section I) is historical context that you can safely skim or skip.
Questions for analysis
In his discussion of interest rates in section I, Friedman argues that a sustained increase in the growth of the money supply would lead to lower interest rates in the short run but higher (nominal) interest rates in the long run. Briefly describe the macroeconomic effects at work in this reversal.
Examine Romer's Figure 6.7 (page 258). How does the behavior of the unemployment/inflation relationship before Friedman's paper differ from the behavior afterward? To what extent was Friedman successful in predicting that the Phillips curve would shift and how?
What is Friedman's fundamental criticism of the Phillips curve in terms of nominal and real wage changes? Under what conditions does he suggest that it would shift? Use Friedman's analysis to explain the points on Romer's Figure 6.7 after 1968.
Most modern central banks, including the Fed, attempt to balance the twin goals of keeping inflation under control and stabilizing fluctuations in real output. Some, such as the European Central Bank, are more committed to inflation control and others worry more about business cycles. What policy rule does Friedman advocate and why?