According To Montarists
Summary:
Monetarists believe that changes in the money supply are the primary cause of changes in economic activity and that targeting the money supply growth rate is the most effective way for governments to achieve economic stability. They also argue that an increase in the money supply will result in a proportional increase in prices, assuming the economy is at full employment. Monetarists view the relationship between money supply, output, and income as crucial and consider targeting the money supply growth rate as the best policy for meeting economic objectives. They also advocate for a stable money supply, with changes potentially affecting economic activity in the opposite direction. However, they argue that fiscal policy is a weak tool for economic stabilization due to fluctuations in the demand for money. The monetarist theory emphasizes the importance of money in the economy.
Monetarists believe that changes in the money supply are the primary cause of changes in economic activity. They advocate for targeting the money supply growth rate as the most effective way for governments to achieve economic stability. Monetarists argue that an increase in the money supply will lead to a proportional increase in prices, assuming the economy is at full employment. They view the relationship between money supply, output, and income as crucial and consider targeting the money supply growth rate as the best policy for meeting economic objectives. Monetarists also stress the importance of a stable money supply, as they believe changes in it could potentially affect economic activity in the opposite direction. Furthermore, they argue that fiscal policy is a weak tool for economic stabilization due to fluctuations in the demand for money. Overall, the monetarist theory emphasizes the importance of money in the economy.
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