Monetarism is an economic theory that focuses on the macroeconomic effects of the supply of money and central banking. Formulated by Milton Friedman, it argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.

Monetarists believe in controlling the supply of money that flows into the economy while allowing the rest of the market to fix itself. In contrast, Keynesian economists believe that a troubled economy continues in a downward spiral unless an intervention drives consumers to buy more goods and services.

Monetarists argue that if the Money Supply rises faster than the rate of growth of national income, then there will be inflation. “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

Principles of Keynesianism Keynesians reject the theory of crowding out presented by Monetarists. Keynesians say that if there is a sharp rise in private sector saving (and fall in spending), government spending can offset this decline in private sector spending.

To put it plainly, monetarism is a parallel version of Keynesian demand management. Whereas Keynesians naively believe that government spending is a source of economic growth, monetarists in a similarly naïve way believe that money creation for the sake of it boosts the economy.

The monetarists emphasise the role of money as the principal cause of demand-pull inflation. Consequently, the amount of money spent did not affect the level of real output so that a doubling of the quantity of money would result simply in doubling the price level.

Monetarists (believers of the monetarism theory) warn that increasing the money supply only provides a temporary boost to economic growth and job creation. Over the long run, increasing the money supply increases inflation. As demand outstrips supply, prices will rise to match.

Monetarists are more critical of the ability of fiscal policy to stimulate economic growth. Monetarists /classical economists believe wages are more flexible and likely to adjust downwards to prevent real wage unemployment. Monetarists stress the importance of controlling the money supply to keep inflation low.

Net photosynthesis. However, it is often more important to consider, and very much easier to measure, the net gain. Net photosynthesis is the increase (or decrease) in dry matter that results from the difference between gross photosynthesis and the losses due to respiration and the death of plant parts (Figure 3.8).

Last Updated on Sat, 22 May 2021 | Species Richness The rate of photosynthesis is a gross measure of the rate at which a plant captures radiant energy and fixes it in organic carbon compounds. However, it is often more important to consider, and very much easier to measure, the net gain.

Photosynthesis releases energy, while cellular respiration stores energy. Photosynthesis used carbon dioxide, while cellular respiration produces carbon dioxide. Q. The diagram shows the relationship between photosynthesis and cellular respiration and the organelles in which they occur.

Monetarism is a macroeconomic theory which states that governments can foster economic stability by targeting the growth rate of the money supply. Essentially, it is a set of views based on the belief that the total amount of money in an economy is the primary determinant of economic growth.