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Monetarism, theoretical position in economics, chiefly associated with the work of Milton Friedman of the University of Chicago. This contemporary theory is based on the 19th-century “quantity-of-money” theory, which directly related changes in price levels to changes in the amount of money in circulation. Monetarism, which stands generally in opposition to Keynesianism, advocates curing inflation and depression not by fiscal measures but rather by control of the nation's money supply—for instance, by varying the interest rate charged by the Federal Reserve System and expanding or limiting the sale of treasury bills.

See also: Economics.

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