What it is:
Monetarism is a well-known macroeconomic school of thought developed by Milton Friedman.
How it works/Example:
The Great macroeconomics. In 1936, John Maynard Keynes published "The General Theory of Employment, Interest and ," which theorized that government spending and tax policies could be used to stabilize economies. This Keynesian school of economic thought argues that an increase in government expenditures or a reduction in taxes stimulate an economy; likewise, a reduction in government expenditures or an increase in constrict an economy and reduce inflation.and its resulting high greatly influenced the development of
Later, Friedman developed another well-known macroeconomic school of thought called monetarism, which rejected Keynes's fiscal policy idea and stated instead that regulating thesupply was the key to economic stability. Friedman published several books on a variety of topics, but his most well-known is "Studies in the Quantity Theory of ," published in 1956.
Why it matters:
Monetarists generally believe thatmostly depends on how much the government prints. The idea is that when more is available, more people spend , which increases demand for goods and services, which drives their prices up. Whether this is correct is the subject of decades of debate, and there is less controversy about whether the theories are right than there is about how much influence the government should have in any . Ultimately, the overall goal of monetarism is to maintain long-term economic prosperity or, more cynically, to promote an that is in line with the government's political goals.