Monetary Policy
In the attached resource files, there is a chart that outlines three perspectives on how the economy should be run: the mainstream macroeconomics perspective, the monetarism perspective and the rational expectation perspective. Which one of these approaches do you most agree with? What in Macroeconomics supports your point-of-view?
The view that makes the most sense is the rational expectation perspective. The reason why, is because this will take into account a number of real world factors that will have an impact upon economic growth. The most notable include: the private economy is stable when you are at the natural unemployment rate, there can be unexpected shocks to aggregate demand / aggregate supply over the short-term, cost push inflation is fueled by the lack of growth in the money supply and changes in monetary policy will have little impact upon inflation over the short-term. (Summary of Macroeconomic Views)
What is supporting these views, are the events that have been occurring since the implosion in real estate values in 2007. Where, the various central banks around the world have been engaging in activities that will...
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