Under the monetarist theory, a policy of "easy money" will inevitably lead to increases in the consumer price index.

Question

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Monetarist theory asserts that the quantity of money in circulation has a direct impact on inflation. According to this theory, increasing the money supply too rapidly can lead to an increase in demand for goods and services, causing prices to rise. Therefore, a policy of easy money, which implies increasing the money supply, can lead to inflation (as measured by the consumer price index).

Under the Monetarist Theory, a Policy of "Easy Money" Will