Definition

Noun: An economic theory which asserts that large changes in the national money supply are the primary, dominant cause of major changes in the overall economy, particularly in the levels of unemployment and inflation. It holds that controlling the growth rate of the money supply is the most effective method of stabilizing economic activity.

Usage

The term is used to describe a specific school of macroeconomic thought. It is typically discussed in academic, financial, and policy-making contexts. * As a subject of study or debate: Monetarism was a central topic in 20th-century economics. * To describe a policy approach: A government may be criticized for or praised for its adherence to monetarism.

Examples

• The central bank's strategy was heavily influenced by monetarism, focusing squarely on controlling the money supply.
• During the 1970s, monetarism gained prominence as an alternative to Keynesian demand management.
• Critics of monetarism argue that it oversimplifies the complex drivers of inflation.

Advanced Usage

• Monetarist (adj/noun): The related adjective describes policies or ideas based on this theory. As a noun, it refers to an economist or policymaker who advocates for it.
  • The monetarist prescription was to reduce the growth of the money supply.
• The theory is often associated with economist Milton Friedman and the famous dictum, "Inflation is always and everywhere a monetary phenomenon."

Variants and Related Words

• Monetarist: (noun) A proponent of monetarism. (adjective) Relating to or characteristic of monetarism.
• Monetary policy: The process by which a central bank controls the supply of money, often associated with monetarist ideas.

Synonyms

• Quantity theory of money (in its modern form)

Antonyms / Contrasting Theories

• Keynesian economics
• Fiscalism (emphasis on government spending and taxation)
• MMT (Modern Monetary Theory)

Noun

1. an economic theory holding that variations in unemployment and the rate of inflation are usually caused by changes in the supply of money