Question

what are the ideas of monetarism?

Answer 1

• 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