The monetarists which are known as modern friends of
classical economists have much
more similarity regarding different issues. However, they also differ in certain
fields. In connection with money monetarists say:
"Money Matters Very Much".
It means that according to monetarists money in an economy plays a
very vital role. They say that aggregate expenditures of the economy are
influenced by the changes in the rate of interest As a result, the level of
income and employment can be affected. But it is confined to just short run. In
case of long run there is always existing a natural rate of unemployment. It
means that whenever through easy fiscal and monetary policies aggregate demand is increased, the
level of unemployment will come down. But whenever aggregate demand is controlled
prices will be stabilized, but economy will experience the same level of
unemployment which the economy faced before increase in aggregate demand.