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Monetarist Model definitions

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  • Monetarist Model
    A framework emphasizing the money supply's influence on economic stability, contrasting with government intervention approaches.
  • Keynesian Economics
    An economic theory prioritizing government intervention to address inflation and recessions, often citing sticky wages and prices.
  • Money Supply
    The total amount of currency available in an economy, typically managed by a central bank to influence economic activity.
  • Federal Reserve
    The central banking system in the United States responsible for controlling the money supply and implementing monetary policy.
  • Quantity Theory of Money
    A concept linking the money supply and velocity to the price level and real GDP, forming the basis of monetarist thought.
  • Velocity of Money
    A measure of how frequently a unit of currency circulates and is spent within the economy over a given period.
  • Price Level
    An indicator reflecting the average cost of goods and services in an economy, used to gauge inflation and purchasing power.
  • Real GDP
    A metric representing the total value of goods and services produced, adjusted for inflation, to show true economic growth.
  • Monetary Policy
    Actions taken by a central bank to manage the money supply and interest rates, aiming to influence economic outcomes.
  • Inflation
    A sustained increase in the general price level, reducing the purchasing power of money and often challenging economic models.
  • Competitive Markets
    Economic environments where numerous buyers and sellers interact, fostering stability and efficient resource allocation.
  • Sticky Wages
    A situation where employee compensation remains unchanged despite shifts in economic conditions, affecting market adjustments.
  • Sticky Prices
    A phenomenon where prices of goods and services resist change, even when supply or demand fluctuates.
  • Milton Friedman
    A Nobel Prize-winning economist who developed the monetarist model, advocating for the primacy of money supply in economic stability.