In the strict monetarist view, a large increase in the money supply will have
A) a large impact on the velocity of money and a large impact on nominal output.
B) a large impact on the velocity of money and a small impact on nominal output.
C) no effect on the velocity of money and a large impact on nominal output.
D) no effect on the velocity of money and a small impact on the nominal output.

Question

Quizplus · Accepted Answer

In the strict monetarist view, an increase in the money supply is directly related to an increase in nominal output, assuming the velocity of money is constant. Monetarists believe changes in the money supply have major effects on the economy primarily through changes in nominal output, not through changes in the velocity of money.

In the Strict Monetarist View, a Large Increase in the Money