Monetarists argue that
A)The velocity of money is constant.
B)Fiscal policy puts idle money balances to work,which reduces V.
C)When there is a recession,people accumulate money balances,which increases V.

Question

Quizplus · Accepted Answer

Monetarists argue that the velocity of money is constant, meaning that changes in the money supply directly impact prices and outputs. This view emphasizes the importance of the money supply in maintaining stable economic growth and avoiding inflation. Fiscal policy, as mentioned in choice B, is not typically associated with the monetarist perspective, which instead emphasizes the role of monetary policy in stabilizing the economy. Choice C is also incorrect, as Monetarists would argue that people do not accumulate money balances during a recession, and that instead, the recession occurs because of a decline in the money supply.

Monetarists Argue That