According to monetarist theory, the force that starts a recession is a
A) decrease in investment in stocks and bonds.
B) decrease in spending money on goods.
C) slowdown in the growth rate of the quantity of money.
D) fall in interest rates that makes people decrease their saving.

Question

Quizplus · Accepted Answer

According to monetarist theory, a recession is generally initiated by a slowdown in the growth rate of the quantity of money. Monetarists emphasize the importance of maintaining a stable rate of growth in the money supply to support economic growth and prevent inflationary pressures. If the growth rate of the money supply slows down, it can lead to a decrease in spending on goods and services, which can then trigger a recession.

According to Monetarist Theory, the Force That Starts a Recession