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Now that we know how monetary policy
(MP) works we will examine other issues associated with it.
Economists disagree over the
effectiveness and efficacy of monetary policy. Mainstream
(New Keynesian) economists believe monetary policy is not
very effective but it should be used to accommodate fiscal
policy. Monetarists (New Classical) economists believe
monetary policy is very effective but should not be used
with discretion.
Read those two sentences again.
Mainstream/New
Keynesian economists believe MP IS NOT EFFECTIVE BUT
IT SHOULD BE USED.
Monetarist/New
Classical economists believe MP IS VERY EFFECTIVE
BUT DON'T USE IT.
Isn't economics fun?
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