According to monetarists,
A) changes in the money supply are the primary cause of changes in the price level.
B) an expansionary ﬁscal policy will lower interest rates and overstimulate 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.

Question

Quizplus · Accepted Answer

Monetarists argue that changes in the money supply are the primary cause of changes in the price level. They believe that the relationship between the money supply and the level of economic activity is more direct and predictable than other factors, such as changes in fiscal policy or the level of aggregate demand. Therefore, they advocate for a stable and predictable growth rate of the money supply to avoid unpredictable fluctuations in the economy.

According to Monetarists