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Milton Friedman is an American economist who had the biggest impact in the 20th century. He is the most famous representative and the leader of monetarism. He received the nobel prize for economic in 1976 for his contribution in the field of consumption analysis and monetary theory.Friedman's ideas emphasize the advantages of the market and the disadvantages of government intervention in the economy and these ideas have tremendous impact to the economic policies of many countries, especially in the period of Ronald Reagan in America and Mrs Margaret Thatcher in UK. Until now, his economic theories still has big influence in the thinking of many countries and are controversial subject. In this essay, I will examine the core theoretical approach towards inflation and explain his relevant economic theories, including both negative and positive aspect attributes and also analyze whether it is a suitable application to inflation problems in Viet Nam economy today.

Define and explain the relevant theory :

‘Inflation is the rate of increase in prices for goods and services’ ( BBC News 2012).Inflation is the biggest issue in the economic. It affects directly to people income include state benefits, pensions and maybe interest rates in bank. For example, the Bank of England base on inflation to set interest rates. If the Bank's Monetary Policy Committee thinks inflation is likely to be below 2%, it may cut interest rates ( BBC News 2012) Milton Friedman ‘s theory is ‘ that an increase in the money supply was the cause of inflation’ (BBC News 2006). It ‘s because when the money supply is plentiful, its lost value which means a certain amount of money will buy less or we would need to spend more to buy the same things that we bought b...

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... two main arguments in his ideas. Firstly , he focus on economics value and believes that the increase in money supply can lead to inflation. Secondly, he does not want the government involvement in economy but let the market decide between producer and buyer and control itself. His theory is still a controversial topic but it ‘s one of the most influential economic theory. Applying his theory to the economic situation is an effective way to help any country curb inflation but also brings some drawbacks such as unemployment and might be recession. VietNam’s economic policy should learn about his solution that tightening money supply to curb inflation. About other aspects of theory, VietNam also should learn but in a selective way which is suitable with current economy context. The essay also recommends some possible recommendations for improve the current situation.