what are the ideas of monetarism?

Expert Solution

Monetarism is a school of thought in monetary Economics.
Emphasizes the role of government.
Monetary theory states that variation in the money supply influences on national output.
Monetary policy are met by aiming the growth rate of money supply.
Inflation is Everywhere a monetary phenomenon.
If the money supply is growing Economy will grow.
If money supply is accelerating so will Economic growth.
Accordingly policy monetary makers control Inflation by allowing money supply to grow not faster than the desired rate of Economic growth.
If the growth of population increases money supply would be no way to prevent deflation.
It is a mixture of theoretical ideas, philosophical beliefs and policy prescriptions
Monitorists believe that the money supply is the primary determinent of GDP in short run
It is a primary determinent of price level in the Long run
Relies on the predictability of velocity rather than absolute stability

Rahul Sunny answered 2 years ago

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