Monetarists believe that changes in monetary policy would have:
A)only short-term effect on the price level.
B)only short-term effect on real GDP.
C)only long-term effect on real GDP.
D)no effect on price level and real GDP.
E)both short-term and long term effect on real GDP.

Question

Quizplus · Accepted Answer

Monetarists believe that changes in monetary policy primarily affect real GDP in the short term, as prices and wages are sticky. In the long term, they argue that monetary policy mainly influences the price level, not real GDP, due to the economy's return to its natural level of output.

Monetarists Believe That Changes in Monetary Policy Would Have