Monetarism asserts that GDP will grow steadily if the:
A) government keeps its budget deficit high.
B) government engages in crowding out.
C) money supply grows steadily.
D) money supply grows faster than the economy.

Question

Quizplus · Accepted Answer

Monetarism emphasizes the importance of controlling the money supply to maintain a stable level of economic growth. According to this theory, increasing the money supply at a steady rate will promote economic growth and stability, while increasing the money supply too quickly could lead to inflation. Therefore, the best choice is C, as it states that GDP will grow steadily if the money supply grows steadily. The other choices (A, B, and D) are not consistent with the principles of Monetarism.

Monetarism Asserts That GDP Will Grow Steadily If The