What, according to the monetarist theory of the business cycle, leads to changes in real GDP?
A) a change in profit expectations
B) a change in the growth rate in tax revenue
C) a change in the growth rate of the quantity of money
D) an unanticipated change in aggregate demand

Question

Quizplus · Accepted Answer

According to monetarist theory, primarily associated with Milton Friedman, changes in the growth rate of the quantity of money in an economy are the main cause of fluctuations in real GDP. Monetarists argue that variations in the money supply have major short-term and long-term effects on the economy, including influencing the levels of inflation, employment, and the business cycle.

What, According to the Monetarist Theory of the Business Cycle