Final: Did the gold standard cause the great depression

Question 1

Monetarism believes changes in what were a driver of business cycles

Answer 1

Changes in the money supply were a driver of business cycles
Not a symptom of, as many thought
They identified an absolute monetary contraction that occurred in 6 periods, each of which corresponded to recessions or depressions
Including the great depression

Question 2

Monetarism and Monetary disequilibrium meaning

Answer 2

Specifically, if allowed to persist, an excess demand for money (and the accompanying deflation), can cause a recession.

Question 3

Monetarism and the Great Depression

Answer 3

Bank failures
Caused increase in the currency-deposit ratio
Flight of deposits
And reserve-deposit ratio
Flight of deposits
M stock decline severely
Between Oct. 1929 and June 1933, the money stock fell by about 1/3rd.