According to the Monetarists a decrease in investment spending initially __________ unemployment so that the price level __________. The resulting __________ in the real money supply __________ spending.
A) increases; rises; increase; decreases
B) increases; falls; increase; increases
C) increases; falls; increase; decreases
D) decreases; rises; increase; increases

Question

Quizplus · Accepted Answer

Monetarists believe that a decrease in investment spending initially increases unemployment and causes the price level to fall. This fall in the price level leads to an increase in the real money supply, which in turn increases spending.

According to the Monetarists a Decrease in Investment Spending Initially