According to monetarists, a change in the money supply changes
A) the velocity of money, which in turn changes the nominal GDP.
B) investment spending, which in turn changes the nominal GDP.
C) the interest rate, which in turn changes the nominal GDP.
D) aggregate demand, which in turn changes the nominal GDP.

Question

Quizplus · Accepted Answer

Monetarists, such as Milton Friedman, argue that changes in the money supply directly affect aggregate demand. Since nominal GDP is a measure of aggregate economic activity, changes in the money supply influence nominal GDP through their impact on aggregate demand.

According to Monetarists, a Change in the Money Supply Changes