Which of the following is the factor that leads to business cycles in the monetarist business cycle theory?

Question

Quizplus · Accepted Answer

According to the monetarist business cycle theory, fluctuations in the growth rate of the quantity of money lead to business cycles. This theory emphasizes the importance of the central bank's monetary policy and its impact on the economy. An expansionary monetary policy, which increases the growth rate of the quantity of money, is believed to stimulate economic growth in the short run but results in inflation in the long run. On the other hand, a contractionary monetary policy, which reduces the growth rate of the quantity of money, leads to a recession in the short run but reduces inflationary pressures in the long run.

Which of the Following Is the Factor That Leads to Business