In economics, microeconomics is a term that respectively defines how people live and how the choices they make affect the economy. In other words, it is a study of households and how their choices affect the price of market goods and the economy as a whole. Monetary control or monetarism, on the other hand, is a theory asserted by Milton Friedman according to which the money supply is the primary driver of economic growth. It is clear that there is a very close relationship between microeconomics and monetarism, as we will observe in this context. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essayAccording to Milton Friedman, control of money has a direct impact on microeconomics. It states that when a lot of money is released into the money chain, a demand for more money is created and, in doing so, businesses and other actors in an economy produce more goods and services, thereby creating new jobs (Friedmanr and Friedman, 2012). ). However, he warns that monetarism may only offer a temporary boost to the economy which could be followed by recession and inflation in the long term. It is therefore important that the money supply is regulated to avoid a situation where demand could exceed supply and affect the prices of raw materials and put several jobs at risk. In the past, currency was a valuable measure of liquidity, but things have changed in today's times. world. Liquidity is considered to be cash, market funds and credit. In contrast, bonds, loans, and mortgages are considered credit (Pindyck & Rubinfeld, 2018). Since money does not measure stocks, home equity and other assets, people today are more willing to invest in stocks than money markets. Indeed, when stock markets soar, people become richer and have purchasing power. For this reason, I disagree with Milton Friedman that monetarism determines microeconomics. On the other hand, I agree with Milton Friedman when he says that microeconomics can be greatly influenced by the money supply, because when the quantity of money in an economy increases, the rate Interest rates tend to fall so to encourage people to apply for loans to improve their businesses (Pindyck & Rubinfeld, 2018). Interest rates fall because banks have more money to lend to people. This gives people the opportunity to borrow money to expand their business or purchase expensive products to meet their lifestyle. In this case, it is clear that money supply can significantly improve microeconomics. Conversely, when currency declines in an economy, interest rates skyrocket and things become more expensive, thus directly affecting the population and their opportunity cost. In a case where microeconomics dictates the money supply in the economy, the risks of inflation are doubled. For this reason, consumer sovereignty should be regulated by the control of money and not the other way around. This supports Milton Friedman when he asserts that the cure for inflation lies in higher interest rates (Friedmanr & Friedman, 2012). While reducing the money supply may make life more difficult for people due to rising interest rates, it also introduces valuable principles such as cost-benefit comparisons in which people calculate the cost of an item, assess its value and use.