Legal Definitions - monetarism

Monetarism is an economic theory that was developed by Milton Friedman in the late 1960s. It suggests that the money supply is the most important factor that influences the economy.

For example, if the government increases the money supply, it can lead to inflation because there is more money available to spend, which can drive up prices. On the other hand, if the government decreases the money supply, it can lead to a recession because there is less money available to spend, which can cause businesses to struggle and people to lose their jobs.

Monetarists believe that controlling the money supply is the key to stabilizing the economy and preventing inflation and recession.