Monetarists recommend that the money supply should grow at a:
A) rate that changes as the economy moves from stage to stage in the business cycle.
B) steady rate that is higher than output's growth rate to stimulate growth.
C) rate that varies in direct proportion to unemployment to offset it.
D) slow, steady rate that is based on the long-run real GDP growth rate.

Question

Quizplus · Accepted Answer

Monetarists, such as Milton Friedman, argue that the money supply should grow at a slow, steady rate in line with the long-run real GDP growth rate to maintain price stability and avoid causing economic booms and busts. They believe that this approach provides a stable economic environment.

Monetarists Recommend That the Money Supply Should Grow at A