Monetarists- Old School Econ
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Title: Monetarists- Old School Econ

Essay Details:

Subject: Business
Author: Carletta C
Date: April 2, 2014
Level: University
Grade: A
Length: 2 / 451

Essay text:

This would make monetary policy appear to be effective in countering short term fluctuations in GDP. However, over the long term, as prices eventually change and GDP returns to its potential level, then the rate of change in M will directly affect the rate of change in P. According to this rational, monetary policy might appear to stimulate the economy in the short term, but over a longer period of time the economy will move back towards its potential level with a higher rate of inflation. For this reason, monetarists believe that monetary policy should be avoided. They argue that because of our difficulty in forecasting problems, our inability to measure the money supply (which is ironic considering the flaws in monetarist thinking), and because of the potential political bias to stimulate the economy to lower unemployment than full-employment rates, that we would be better served in not using monetary policy at all...

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