Monetarism

School of thought in monetary economics

Monetarism is a school of thought in monetary economics that emphasizes the role of policy-makers in controlling the amount of money in circulation. It gained prominence in the 1970s, but was mostly abandoned as a direct guidance to monetary policy during the following decade because of the rise of inflation targeting through movements of the official interest rate. The monetarist theory states that variations in the money supply have major influences on national output in the short run and on price levels over longer periods.

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