Monetarism
Monetarism is an economic concept where the goal of
the central bank is to keep prices stable and
avoid big ups and downs in the economy
Content:
Key thinker
Method used to stable the prices
Relevancy today
Example of Monetarism
The Key thinker of Monetarism was Milton Friedman
Milton Friedman
• Political view: Republican
• graduated from Rahway High School in 1928,
• Got his bachelor’s degree at Rutgers University in
1932
Milton Friedman was a strong critic of Keynesian
economics (Keynesian economics is the idea that
governments should increase spending or cut taxes to
boost demand and reduce unemployment during
economic downturns), He thought the opposite way.
Milton Friedman considered an economic idea where
the central bank controls the money supply.
, The market should mostly self-correct itself, with little
intervention from the central bank to keep stable prices
So, how and when did Monetarists decide to stable the
prices?
They use the quantity theory of money to
determine the timing to stable the prices:
https://medium.com/@s-blog/the-quantity-theory-of-money-8aafc6adf3ef
https://medium.com/@lramlakhanpatel/the-quantity-theory-of-money-understanding-the-link-
between-money-prices-and-the-economy-5c1950c4d83e
The Formula M*V=P*Y (quantity theory of money)
describes the changes when:
Monetarism is an economic concept where the goal of
the central bank is to keep prices stable and
avoid big ups and downs in the economy
Content:
Key thinker
Method used to stable the prices
Relevancy today
Example of Monetarism
The Key thinker of Monetarism was Milton Friedman
Milton Friedman
• Political view: Republican
• graduated from Rahway High School in 1928,
• Got his bachelor’s degree at Rutgers University in
1932
Milton Friedman was a strong critic of Keynesian
economics (Keynesian economics is the idea that
governments should increase spending or cut taxes to
boost demand and reduce unemployment during
economic downturns), He thought the opposite way.
Milton Friedman considered an economic idea where
the central bank controls the money supply.
, The market should mostly self-correct itself, with little
intervention from the central bank to keep stable prices
So, how and when did Monetarists decide to stable the
prices?
They use the quantity theory of money to
determine the timing to stable the prices:
https://medium.com/@s-blog/the-quantity-theory-of-money-8aafc6adf3ef
https://medium.com/@lramlakhanpatel/the-quantity-theory-of-money-understanding-the-link-
between-money-prices-and-the-economy-5c1950c4d83e
The Formula M*V=P*Y (quantity theory of money)
describes the changes when:
