Monetarist theory focuses on money supply from "summary" of EBOOK: Macroeconomics by Rudiger Dornbusch,Stanley Fischer,Richard Startz
Monetarist theory emphasizes the significance of money supply in influencing economic activity. According to this theory, changes in the money supply have a direct impact on the overall level of economic activity within an economy. Advocates of monetarism argue that fluctuations in the money supply are the primary cause of changes in real GDP and the price level.
The central idea behind monetarism is that fluctuations in the money supply can lead to fluctuations in aggregate demand, which in turn affect output and prices in the economy. By controlling the money supply, policymakers can effectively manage economic conditions and stabilize the economy.
Monetarists believe that the key to maintaining a stable economy lies in...
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