Question

A. Compare monetarist and Keynesian views on the proper conduct of fiscal policy. For both

monetarists and Keynesians, explain not only their conclusions concerning fiscal policy but
also how those conclusions are related to their respective theories.

B. Compare monetarist and modern Keynesian views on the proper conduct of monetary policy.
For both monetarists and Keynesians, explain not only their conclusions concerning
monetary policy but also how those conclusions are related to their respective theories.

C. Beginning in the late 1960s, the number of entrants to the labor market increased as the
baby boom generation reached working age. In addition, labor force participation rates for
women began to increase in the mid-1960s. What effect do you think these demographic
factors had on the U.S. natural rate of unemployment at the time? What effect did they
have on the natural rate of output?

Answer 1

The difference between these theories is that monetarist economics involves the control of cash within the economy, while Keynesian economics involves government expenditures. Monetarists believe controlling the availability of cash that flows into the economy while allowing the remainder of the market to repair itself.

Classical theory is that the basis for Monetarism, which only concentrates on managing the cash supply, through monetary policy. Keynesian economics suggests governments got to use economic policy , especially during a recession.

Among ladies age sixteen and over, the proletariat participation rate was thirty three.9 % in 1960, compared with fifty nine.8 % in 1998. ... the most important increase parturient force participation was among those age twenty five to 34—their rate over doubled, from grade of thirty four.0 % in 1960 to seventy six.3 % in 1998.