Monetarists and classical economists assume that:

Question

Quizplus · Accepted Answer

Monetarists and classical economists assume that the economy operates at full employment in the long run and that stimulative monetary policy will only cause the price level to rise. They believe that a sustained increase in money supply will not increase output and employment in the long run, but will only lead to inflation. Therefore, the correct answer is C, as stimulative monetary policy will not create high levels of GDP without inflation or increase both aggregate supply and aggregate demand according to these economists.

Monetarists and Classical Economists Assume That