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Teaching money, fiscal and monetary policies: basic principles

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  • Hassan Bougrine

Abstract

This paper presents some challenges encountered by non-neoclassical economists in explaining that money is not a commodity, that it is not backed by gold, and that it is not scarce. We discuss the role of commercial banks in creating money by simply granting loans. We then explain that, in a similar manner, the central bank can easily pay for any government expenditure simply by accepting to credit the government's account. Once students understand the mechanism behind the creation of money, they are led to formulate the correct economic policies that are needed for the creation of wealth and prosperity.

Suggested Citation

  • Hassan Bougrine, 2012. "Teaching money, fiscal and monetary policies: basic principles," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 3(3), pages 320-332.
    • Handle: RePEc:ids:ijplur:v:3:y:2012:i:3:p:320-332
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