_____________ believe that when the money supply exceeds the amount of money demanded, the public will spend more rapidly, causing real economic activity or prices to rise. They also believe that a too-rapid rate of growth in the money supply will ultimately result in rising prices or inflation because excess money will be used to bid up the prices of existing goods.

Question

Quizplus · Accepted Answer

Monetarists believe in the quantity theory of money, which asserts that changes in the money supply have a direct and proportional effect on the price level. They argue that excess money in the economy will lead to inflation as people have more money to spend on goods and services, which will drive up demand and prices. Monetarists emphasize the importance of controlling the money supply to maintain price stability and promote economic growth.

_____________ Believe That When the Money Supply Exceeds the Amount