Asked by Landrie Pierce on Jun 19, 2024
Verified
According to monetarists
A) changes in the money supply are the primary cause of changes in real output and the price level.
B) an expansionary fiscal policy will lower interest rates and thereby tend to over-stimulate the economy.
C) changes in the velocity of money are more important than changes in the money supply in causing the level of economic activity to change.
D) the supply of money changes in response to changes in the levels of real output and prices.
Monetarists
Economists who emphasize the role of governments in controlling the amount of money in circulation as a primary method for managing the economy and combating inflation.
Money Supply
The comprehensive sum of money resources in an economy, encompassing cash, coins, and deposits in checking and savings accounts, at a specific moment.
Real Output
A measurement of the economic production adjusted for price changes, often used to evaluate the size and health of an economy.
- Describe the monetarist perspective on money supply management and its implications for inflation and economic output.
Verified Answer
SE
Sarper Ek?io?luJun 20, 2024
Final Answer :
A
Explanation :
Monetarists believe that changes in the money supply are the main driver of changes in real output and the price level. This is known as the quantity theory of money, which links the growth rate of the money supply to inflation and economic growth. Monetarists argue that central banks should focus on controlling the money supply in order to maintain stable economic growth and low inflation.
Learning Objectives
- Describe the monetarist perspective on money supply management and its implications for inflation and economic output.