Question

In 2-3 paragraphs, respond to the following. Your initial post should be substantive and be supported by course concepts. Your initial post is due by Wednesday to allow other students to respond.

What are the influences of Keynesian Perspective and the Neoclassical Perspectives on monetary policy?

Cite your sources.

Answer 1

Answer- The theory of keynsian view gives the indirect relation between the growth of GDP and money supply. The main factor which influences as per keynes is the government spending. He felt that the effect of the government spending on the economy will help to stabalise the economy by affecting the interest rates. Hence the indirect root was follows. He said that the cost of unemployment decrease was inflation

The neoclasical theory believed in the direct relation of the money supply with the GDP growth. The contractionary and expansioanary policies of the central bank influence the money supply in the economy which has a direct impact upon AD of the economy and thus influence GDP.