Monetarism is a macroeconomic theory which states that governments can foster economic stability by targeting the growth rate of the money supply. Essentially, it is a set of views based on the belief that the total amount of money in an economy is the primary determinant of economic growth.

How is monetarism used today?

Monetarism today is mainly associated with the work of Milton Friedman, who was among the generation of economists to accept Keynesian economics and then criticise Keynes's theory of fighting economic downturns using fiscal policy (government spending).

How does monetarism control inflation?

According to monetarism, by plugging more money into the economy, the central bank could incentivize new investment and boost confidence within the investor community. Friedman originally proposed that the central bank set targets for the inflation rate.