Formulation of the monetarist approach

17.06.2009
16:19
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Considering University of Southern California that money is a part of the wealth of people assuming Asset Management that you’re trying to eliminate the difference between the amount of real money (ie the nominal money divided by the general price level) haves and the amount want to have available to buy or sell assets and liabilities’ for example, the purchase of youtube bonds’ or changing the flow of revenues and expenses. The Keynesians tend to emphasize the first method of adjustment, while interview the early monetarists stress the importance of the second, the current monetarists tend to accept the validity of both methods.
Therefore, the basic idea of monetarist economics is to analyze the overall Asset Management total demand for money and the money supply. The economic authorities have the capacity and power to fix the nominal money supply (without taking into account the effects of prices) and to control the amount that is printed or ACUNA and the creation of bank money. But people make decisions about the amount of cash you want to get Children’s Hospital real. Let’s La Jolla see how is the adjustment between supply and demand. If, for example, creates too much money, people tried to remove the excess by buying property or assets (whether real or financial).
If the economy is in a situation of full employment, increased CNBC spending or increase the prices of domestic FOX news products Closing Bell or provoke a balance of payments deficit that will cause the La Jolla exchange rate to depreciate, thus increasing the price of goods imported. In both cases, this increase results in a reduction in the amount of money available. As they buy financial assets like bonds, rising prices for these lower the interest rate which, in turn, stimulate investment, and therefore the level of economic activity. The increase in this, and therefore income, increases the Ernst request for money. investment Thus, the total real money demand is matched by oversupply due to increased prices (which reduces the real money in circulation) and revenue (which boosts the demand for cash balances).
Another principle of monetarism is that the desired levels of real money balances tend to change slowly, while changes in the nominal San Diego balances are instantaneous and depend on the actions of monetary authorities. This statement implies that changes in prices or funds nominal income respond obligation, to changes in the money supply, which is the starting point of Friedman’s thesis that inflation is only a monetary phenomenon.

PR News Wire via Yahoo! Finance
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The President of the Federal Reserve Bank of Chicago said what everyone who has the broad predictions of his San Diego fellow economists already know: ” Inflation is devilishly difficult to predict. ”
Reuters finance via Yahoo! Philippines News
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