Economics

Modern Monetary Theory Definition

Modern Monetary Theory Definition

Modern monetary theory aims to explain and analyze modern economies where the national currency is usually fiat money, established and created exclusively with the government. In modern monetary theory, income enters circulation as a result of government spending. Taxation and it is legal tender power to discharge debt set up the fiat income as currency, giving it importance by creating need for it such as a private tax obligation that need to be met using the government’s currency.