The view that excessive growth of the money supply over long periods leads to inﬂation
A) is accepted by the monetarists but not by mainstream macroeconomists.
B) is the main contribution of the rational expectations theory.
C) has been accepted by mainstream macroeconomists.
D) is known as the monetary rule.

Question

Quizplus · Accepted Answer

The view that excessive growth of the money supply over long periods leads to inflation has been accepted by mainstream macroeconomists. Monetarists in particular have emphasized the importance of controlling the money supply to combat inflation. Rational expectations theory does not make a direct contribution to this view, and the monetary rule is a specific policy proposal rather than a general theory about the relationship between the money supply and inflation.

The View That Excessive Growth of the Money Supply Over