Monetarist Economics and Keynesian Economics (Monetarist Economics …
Monetarist Economics and Keynesian Economics
Monetarist economics is Milton Friedman's direct criticism of Keynesian economics theory.
Monetarist economics involves the control of money in the economy, while Keynesian economics involves government expenditures.
Monetarists believe in the control of the supply of money in the economy and allow the rest of the market to fix itself
Monetarists are certain the money supply is what controls the economy. They believe that controlling the supply of money directly influences inflation.
Additionally, monetarists believe that by fighting inflation with the supply of money, they can influence interest rates in the future.
Imagine adding more money to the current economy and the effects it would have on business expectations and the production of goods.
Keynesian economists believe that a troubled economy continues in a downward spiral unless something is done to drive consumers to buy more goods and services.
The economic terminology of demand-side economics is synonymous to Keynesian economics.
Keynesian economists believe the economy is best controlled by manipulating the demand for goods and services, although, these economists do not completely disregard the role the money supply has in the economy and on affecting gross domestic product, or GDP.
Keynesian economists believe in consumption, government expenditures and net exports to change the state of the economy
Conflicts between Objectives
The implication is that there might be a trade off between unemployment and increases in inflation.
The Phillips Curve
This is set against the classical view that there is only unemployment if wages are too high — that is, if the supply of labour is greater than the demand for labour — in which case if more people are allowed to become unemployed the pressure on wages will fall.
Economic growth and the current account of the balance of payments.
Economic growth and environmental sustainability
Balanced budgets and short-run growth