Answer to Question #110739 in Macroeconomics for anesia lalloo

Question

Assess, using both the Keynesianand Classical/Monetarist frameworks, the impact of the macroeconomics stimulus package on GDP and inflation.

Answer 1

Keynesian economists believe the economy is best controlled by manipulating the demand for goods and services. However, these economists do not completely disregard the role the money supply has in the economy and on affecting the GDP and inflation.Monetarists are certain the money supply is what controls the economy, as their name implies. They believe that controlling the supply of money directly influences inflation and that by fighting inflation with the supply of money, they can influence interest rates in the future.