Milton Friedmans Economic Theories Essays -- Economics

History and BackgroundBefore the introduction of Keynesian economics and Milton Friedmans Monetarism theory, there was classical economics. These economists mootd in self-adjusting market mechanisms, however with that the market require perfect competition. Wages and prices in the market must be flexible. These economists believe that release and demand pulls would always help the economy reach panoptic craft. Full purpose could be achieved by the market forces and with that changes the level of employment coreing in a fixed income and aggregate output. They believed that fixed income was a result of full employment and the price level was established by the supply of money in the economy. Since classical economist believed that it was the market that leads to full employment in the economy, they thought the market could do without any government intervention. government activity spending and taxes cause overall harm to economy because it would decrease singular spending an d private consumption. Raising taxes on private consumption would nevertheless help fund public consumption and pay for government spending. immaculate economists theory of monetary policy was thought to plainly affect prices and wouldnt affect truly important factors such as employment. It was a major concern that if the government was to finance its spending all by increasing how much money was produced then it would have the homogeneous out come as expansionary monetary policy. Classical economists found that their trustworthy theories were problematic when the Great Depression hit the United States. They originally argued that the market was self-adjusting so with no government intervention they thought it would automatically crystalise itself. They thought tha... ...//www.econtalk.org/archives/2010/02/phelps_on_unemp.html3. Kevin D. Hoover. Phillips Curve. The Concise Encyclopedia of economic science. 2008. Library of Economics and Liberty. Retrieved whitethorn 25, 20 10 from the World Wide Web http//www.econlib.org/library/Enc/PhillipsCurve.html4. Krugman, P. (2007, February 15). Who was Milton Friedman. Retrieved May 22, 2010, from http//www.nybooks.com/articles/archives/2007/feb/15/who-was-milton-friedman/?pagination=false5. Friedman, M., & Schwartz, A. (1963). A Monetary History of the United States 1865-1960. theme Bureau of Economic Research. Retrieved April 21, 2010, from GoogleBooks6. Alan S. Blinder. Keynesian Economics. The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved May 28, 2010 from the World Wide Web http//www.econlib.org/library/Enc/KeynesianEconomics.html