According to monetarism:
A) Congress and the president should be responsible for controlling the money supply.
B) output will grow steadily if the money supply grows at a steady rate.
C) the Fed should vary the growth rate of the money supply on a monthly basis.
D) changes in the money supply affect the real output only in the long run.

Question

Quizplus · Accepted Answer

Monetarism suggests that output will grow steadily if the money supply grows at a steady rate. Therefore, the best choice is B. The other options are not consistent with monetarism. Congress and the president should not be responsible for controlling the money supply according to monetarism, and the Fed should not vary the growth rate of the money supply on a monthly basis. Furthermore, changes in the money supply can affect the real output in both the short and long run, not just the long run.

According to Monetarism