MONETARISM Meaning and
Definition
-
Monetarism is an economic theory that emphasizes the significance of controlling the money supply as the primary driver of economic growth and stability. It argues that the steady and controlled increase of the money supply is key to achieving long-term economic stability and low inflation.
The core principle of monetarism is that excessive increases in the money supply result in inflation, while decreases in the supply lead to deflation. Monetarists believe that when the money supply expands rapidly, it outruns the growth of goods and services in the economy, ultimately causing inflationary pressure. To counter this, they advocate for a consistent and predictable increase in the money supply, aligning it with the growth rate of the real economy. This is often achieved through central bank policies, such as setting interest rates and regulating the reserve requirements of commercial banks.
Monetarism gained significant attention in the late 20th century, particularly influenced by the work of economists like Milton Friedman. It stands in contrast to Keynesian economics, which places greater emphasis on government intervention, fiscal policy, and aggregate demand management to stabilize the economy. While monetarism recognizes the importance of fiscal policy to a certain extent, it predominantly places the control of money supply and monetary policy as central to achieving macroeconomic stability.
Overall, monetarism asserts that by effectively managing the money supply, an economy can achieve low inflation, stable growth, and reduced business fluctuations.
Top Common Misspellings for MONETARISM *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for MONETARISM
Etymology of MONETARISM
The word "monetarism" originated from the combination of the words "money" and "-ism". The term itself was coined in the mid-20th century to describe a school of economic thought that emphasizes the role of money supply and its control by the central bank in influencing inflation, economic growth, and other macroeconomic variables.
The emergence of monetarism as an economic theory can be traced back to the work of American economist Milton Friedman, who was one of its key proponents. Friedman and other economists, such as Karl Brunner and Allan Meltzer, developed and refined the ideas behind monetarism in the 1960s and 1970s.
The term "monetarism" became widely used to describe this economic theory, as it emphasized the importance of monetary policy and the demand for money in shaping economic outcomes.
Similar spelling words for MONETARISM
Infographic
Add the infographic to your website:
