The KFP model (Keynes-Friedman-Piteková)

Economics is a relatively young, constantly evolving science. The basic methods of its research include scientific abstraction. Simplification allows us to create models that help us understand the logic of real processes. Such models include, for example, the demand curve, the supply curve, and the market equilibrium. The KFP (Keynes-Friedman-Piteková) model, which the author presents for the first time in this article, follows on from the A-B-C model (A – closed market cycle, B – financial market, C – government), explained in the professional monograph Your Economics (Piteková, 2023). The aim of both models is to make it easier for students, as well as the general professional and lay public, to understand the system in which we live. The KFP model will enable us to understand the functioning of the market mechanism at the level of the state or integration group. It uses the conclusions of the Mundell-Fleming model to connect the work of Keynes and Friedman. The traditional statement “Friedman versus Keynes” can thus be modified in the light of macroeconomic equilibrium to “Keynes A Friedman”. The implementation of the KFP model does not contradict the theory of the founder of economics as a science, A. Smith (1776), as well as Say's law of markets (1803).