In the 1920s, John Maynard Keynes prompted a division between microeconomics and macroeconomics. Under Keynesian economics macroeconomic trends can overwhelm economic choices made by individuals. Governments should promote aggregate demand for goods as a means to encourage economic expansion. Following World War II, Milton Friedman created the concept of monetarism. Monetarism focuses on using the supply and demand of money as a method for controlling economic activity. In the 1970s, monetarism has adapted into supply-side economics which advocates reducing taxes as a means to increase the amount of money available for economic expansion. COUNT 5
QSN1 What did John Maynard Keynes want to separate? ANS1 microeconomics and macroeconomics QSN2 What concept did Milton Friedman propose after World War II? ANS2 monetarism QSN3 How did monaterism aim to control the economy? ANS3 using the supply and demand of money QSN4 In the 1970s, what did monaterism turn into? ANS4 supply-side economics QSN5 How did supply-side economics try to increase the amount of money in the market? ANS5 reducing taxes