Critics of Monetarism argue that the factor that is more important than the supply of money is
A) the expansion and contraction of credit.
B) the rise and fall of demand deposits.
C) the quantity of currency in circulation.
D) the frequency of outside shocks that cause booms and busts.

Question

Quizplus · Accepted Answer

Critics of Monetarism argue that the expansion and contraction of credit is more important than the supply of money because credit can affect spending and investment decisions, and therefore have a greater impact on the overall economy. Additionally, the quantity of currency in circulation is not always a reliable indicator of the state of the economy, as it can be affected by factors such as hoarding and changes in financial technology. The rise and fall of demand deposits, while related to the supply of money, is also not as important as credit because it does not directly affect spending and investment decisions. Lastly, the frequency of outside shocks may impact the economy, but they are often unpredictable and not controllable, making them a less reliable factor to focus on.

Critics of Monetarism Argue That the Factor That Is More