The ________ theory emphasizes that changes in prices and interest rates are the main reasons behind fluctuations in an economy.
A) real business cycle
B) Keynesian
C) Ricardian
D) monetary

Question

Quizplus · Accepted Answer

The monetary theory emphasizes the role of changes in prices and interest rates in affecting an economy, particularly through the actions of the central bank and the money supply. The other options either focus on more structural or long-term factors (such as in the case of the Ricardian theory) or on short-run fluctuations due to other factors such as aggregate demand and fiscal policy (as in the case of the Keynesian theory).

The ________ Theory Emphasizes That Changes in Prices and Interest