CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Views about the important of money in the working of the economy vary greatly. In particular, the means by which money affects income and output and the extent to which changes in money supply (that is money stock ) affect the economy are two issues that have given rise to a major debate between two group of economists distinguished by their adherence to two conflicting bodies of economic theory called Keynesians and Monetarism.
INTRODUCTION
The debate has been long and complicated and has progressed through several stages over the years. This debate is important implications for the effectiveness of monetary policy and the importance of monetary policy relative to fiscal policy, in affecting income, output, employment and the rate of inflation. The relationship between the stock of money and the level of income and output is fundamental to the monetarism and Keynesians debate
