Adam Smith had a basic belief that people would act in their own self-interest and produce the goods and services required by society as a whole (www.thewallstreetpsychologist.com). He often used what is referred to now a days as “the invisible hand theory”. This theory is essentially, a natural phenomenon that guides free markets and capitalism through competition for scarce resources (www.investo...
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... to actually work for a change. This is where you see the inflation rate increase tremendously on the Phillips Curve as unemployment nears that threshold. He also predicted that the Phillips Curve was not stable and would ultimately end up causing stagflation (an increase in inflation and unemployment at the same time).
Friedman disliked the idea of the Federal Reserve System but worked around the fact that it wasn’t going away anytime soon. He incorporated it into his theories stating that the only good policy would be to steadily increase the money supply. The largest alternative macroeconomic policy Friedman is known for is called “Monetarism”.
During the 1960s he promoted an alternative macroeconomic policy known as "monetarism".
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