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26 January, 02:17

Nobel laureate Milton Friedman and his followers belong to a school of thought known as monetarism. What do the monetarists argue the Fed should target?

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  1. 26 January, 05:00
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    Inflation

    Explanation:

    Monetarism is an economic school that argues for a controlled and stable money supply. Friedman believed that inflation was a monetary phenomenon, and that a expansionary monetary policies that increase money supply very fast always lead to inflation.

    Ever since, monetarism has come to dominate most central banks in the world, including the Federal Reserve. Before Friedman's theories, central banks were more likely to be keynesian, in the sense that they would target unemployment instead of inflation.
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