According to the aggregate supply drawn under the monetarist view,which of the following would lead to a higher price level?
A) The purchase of bonds in the open market by the Fed.
B) An increase in the discount rate.
C) An increase in the reserve requirement.
D) A decrease in the money multiplier.

Question

Quizplus · Accepted Answer

The purchase of bonds in the open market by the Federal Reserve injects more money into the economy, increasing the money supply. According to the monetarist view, an increase in the money supply leads to a higher price level due to more money chasing the same amount of goods and services.

According to the Aggregate Supply Drawn Under the Monetarist View,which