Monetarists believe that an increase in the money supply will lead to:

Question

Quizplus · Accepted Answer

Monetarists believe that an increase in the money supply will lead to an increase in the price level, as the quantity theory of money suggests that there is a direct relationship between the money supply and the price level. An increase in real GDP or a decrease in nominal GDP may not necessarily be a direct result of an increase in the money supply. The choice of an increase in leisure time is not relevant to the concept of monetarism.

Monetarists Believe That an Increase in the Money Supply Will