Monetary Policy - To complete this activity, you will first...

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Unformatted text preview: To complete this activity, you will first need to access these web sites and research historical inflation rates and money growth data at - http://www.nowandfutures.com/key_stats.html#ell and historical CPI data at - http://www.bls.gov/cpi/ Review and compare the trends in money supplies/ aggregates to the trend in the CPI over several decades. State your opinion about the validity of Monetarism (Friedman's famous quote that inflation is everywhere and always a monetary phenomenon). Prior to World War II, the world operated under a unified gold standard, and international trade was paid in gold. Whenever a nation ran up a huge trade deficit, it paid its bill out of its gold reserves, causing a reduction in its domestic money supply. This in turn caused the depressions that wracked so many national economies. Friedman argued that if the money supply were simply held steady, nations wouldn't suffer from depressions in the first place, and would have...
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This note was uploaded on 11/02/2011 for the course ECONOMY G123/EC100 taught by Professor Melissa during the Spring '10 term at Rasmussen College.

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