The monetarist theory of the business cycle regards ________ as the factor that leads to business cycles.
A) unexpected increases in aggregate demand
B) changes in the growth rate of the quantity of money
C) volatility in the interest rate
D) volatility in the demand for money

Question

Quizplus · Accepted Answer

Monetarist theory, primarily associated with Milton Friedman, posits that variations in the money supply are the main cause of economic fluctuations. According to this view, changes in the growth rate of the quantity of money lead to business cycles by affecting aggregate demand.

The Monetarist Theory of the Business Cycle Regards ________ as the Factor