Monetarists contend that a consistent relationship exists between changes in the money supply and changes in nominal GDP.

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Monetarists believe that changes in the money supply have a direct and proportional effect on nominal GDP. They argue that increasing the money supply will lead to higher levels of inflation and nominal GDP, while decreasing the money supply will result in lower levels of inflation and nominal GDP. This is known as the Quantity Theory of Money.

Monetarists Contend That a Consistent Relationship Exists Between Changes in the Money