<Ul> <Li> Keynesian economists believe the central bank can sufficiently assess the detailed economic variables and circumstances in real time in order to control monetary policy in detail . These economists favor monetary policies that attempt to even out the ups and downs of business cycles and economic shocks in a precise fashion . </Li> <Li> Followers of the monetarist school think that Keynesian style monetary policies produce a lot of overshooting, time - lag errors and other unwanted effects, sometimes making things even worse . They doubt the central bank's capacity to analyse economic problems in real time and its ability to influence the economy with correct timing and the right monetary policy measures . So monetarists advocate less intrusive and complex monetary policies, like inflation targeting or a constant growth rate of money supply . </Li> <Li> Some followers of Austrian School economics advocate either the return to free markets in money, called free banking, or a 100% gold standard and the abolition of central banks . </Li> </Ul> <Li> Keynesian economists believe the central bank can sufficiently assess the detailed economic variables and circumstances in real time in order to control monetary policy in detail . These economists favor monetary policies that attempt to even out the ups and downs of business cycles and economic shocks in a precise fashion . </Li> <Li> Followers of the monetarist school think that Keynesian style monetary policies produce a lot of overshooting, time - lag errors and other unwanted effects, sometimes making things even worse . They doubt the central bank's capacity to analyse economic problems in real time and its ability to influence the economy with correct timing and the right monetary policy measures . So monetarists advocate less intrusive and complex monetary policies, like inflation targeting or a constant growth rate of money supply . </Li> <Li> Some followers of Austrian School economics advocate either the return to free markets in money, called free banking, or a 100% gold standard and the abolition of central banks . </Li>

How an increase in the money supply can cause inflation