School of economic thought (also called the Chicago School) which proposes that the quantity
(the money supply) in an economy
is a key determinant
(1) of economic activity
, (2) in creating or curbing inflation
, and (3) in managing economic-cycles. In contrast to Keynesian economics
, monetarism maintains that changes
in money supply
greatly influence aggregate demand
. And that, any attempt by a government
to increase aggregate-demand (by injecting more money in the economy) will, in the long-term if not earlier, will instead result
in higher prices. It is against any attempt to control
economy through fiscal-policy, and advocates supply-side economics
and cutting government-spending.
Credited for preventing economic-depressions for the last
60 years, its influence on economic policy-makers is attributed largely to the University of Chicago economists, chiefly the Nobel-laureate professor Milton Friedman (1912-2006).