Question

Which monetary theory (Keynesian or Monetarist) do you find most effective? Be thorough in your responses and provide sufficient detail. Justify your answer by citing sources.

Answer 1

As we know that the Monetarist theory was put farward by Milton Friedman. Friedman holds that money supply needs to be controlled, in order to fix the rest of market. Monetarist economics founder Milton Friedman believed the monetary policy was so incredibly crucial to a healthy economy that he publicly blamed the Federal Reserve for causing the Great Depression. He implied it is up to the Federal Reserve to regulate the economy.

J.M Keynes is the originater of the keynesian economics. The keyness monetary theory gives more importance to government expenditure. Keynesians believe that the key to both a healthy economy and correcting recessions and depressions is doing whatever it takes to entice consumers to continue spending. Jeynes theory is more effective than the monetarist theory. The govt. expendirure is very important to achieve the goals of rapid growth and development.

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