Suppose the growth rate of the quantity of money increased from 5 percent per year to 8 percent per year. According to the , this event would trigger a business cycle expansion.
A) monetarist cycle model
B) Keynesian cycle model
C) real business cycle model
D) aggregate supply cycle model

Question

Quizplus · Accepted Answer

The monetarist cycle model asserts that changes in the quantity of money are the primary drivers of business cycle fluctuations. According to this model, an increase in the growth rate of the quantity of money would lead to an increase in aggregate demand and output, triggering a business cycle expansion. The Keynesian cycle model, on the other hand, emphasizes the role of government spending and fiscal policy in stabilizing the economy, while the real business cycle model emphasizes technology shocks and fluctuations in productivity. Finally, the aggregate supply cycle model focuses on changes in the short-run aggregate supply curve and their impact on output and inflation.

Suppose the Growth Rate of the Quantity of Money Increased