For monetarists,the sole source of fluctuations in aggregate demand is ________.
A)government spending and tax rates
B)the velocity of money
C)the supply of money
D)international trade variables,i.e.exports and imports

Question

Quizplus · Accepted Answer

Monetarists believe that the supply of money is the main determinant of fluctuations in aggregate demand. In their view, changes in the supply of money can lead to changes in spending patterns and overall economic activity. They advocate for a stable growth rate of money supply to stabilize the economy. Government spending and tax rates can influence aggregate demand, but monetarists argue that their impact is secondary to changes in the money supply. The velocity of money refers to how quickly money changes hands in the economy and is seen as a result of changes in the money supply rather than a cause of fluctuations in aggregate demand. International trade variables can also impact aggregate demand, but again, monetarists argue that the money supply is the primary driver of economic fluctuations.

For Monetarists,the Sole Source of Fluctuations in Aggregate Demand Is