Specifically, monetarists believe in the quantity theory of money and see monetary expansion or contraction as only having a transitory effect on 'real' variables like output and employment. Monetarists applauded when, in 1979, the US Federal Reserve shifted from interest rate targets to money supply targets to try to control inflation and the level of economic activity.
Monetarists differ in their policy recommendations for control of the money supply.
Some support the Federal Reserve Board policy of setting money stock targets, which increase or decrease the rate of growth in the money supply to combat inflation and the business cycle . This, in turn, would control the other money supply aggregates which would benefit price stability. Fallon, Teresa TF Bloomsbury Guide to Human Thought 2. Inflation Bloomsbury Guide to Human Thought 3. Keynesian Theory Bloomsbury Guide to Human Thought 4.