Monetarists also believe that when the money supply exceeds the amount of money demanded, the public will spend more rapidly, causing real economic activity or prices to rise.

Question

Quizplus · Accepted Answer

Monetarists believe in the Quantity Theory of Money, which states that the general price level in the economy is directly proportional to the money supply. If the money supply exceeds the amount of money demanded, people will have more money to spend, which can lead to higher prices or real economic activity.

Monetarists Also Believe That When the Money Supply Exceeds the Amount