monetarism plays a role in economic growth by expanding government intervention. influencing the supply of goods. expanding government spending. influencing the supply of money.
How does monetarism play a role in economic growth?
Answer:
Monetarism, an economic theory associated with the work of economists like Milton Friedman, emphasizes the importance of controlling the money supply to achieve economic stability. Monetarism indeed plays a role in economic growth, and it primarily does so by influencing the supply of money rather than the other factors mentioned.
Influencing the Supply of Money: Monetarism suggests that controlling the money supply is crucial for managing economic growth. By regulating the amount of money circulating in the economy, central banks can affect interest rates, inflation, and overall economic activity. This control over the money supply can help stabilize prices, employment levels, and investment patterns, thereby fostering economic growth.
While government intervention, government spending, and the supply of goods can impact economic growth in various ways, monetarism specifically focuses on the relationship between the money supply and economic performance. By adjusting the money supply to meet the economy’s needs, monetarist policies aim to create a stable and prosperous economic environment.