Which of the following pieces of evidence is most consistent with the monetarist theory?
A) Productivity and GDP move closely together.
B) Changes in real GDP and the quantity of money move closely together.
C) Labor supply decisions do not seem to depend on real interest rates.
D) Money wage rates take some time to adjust to price changes.

Question

Quizplus · Accepted Answer

The monetarist theory emphasizes the role of the quantity of money in determining changes in the economy, particularly in terms of inflation and output. Therefore, changes in real GDP and the quantity of money moving closely together is the most consistent with this theory. The other options are not necessarily specific to the monetarist theory.

Which of the Following Pieces of Evidence Is Most Consistent