Monetarists and rational expectation theorists believe that cost-push inflation as impossible in the long run in the absence of excessive money supply growth.

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Monetarists and rational expectation theorists argue that cost-push inflation, which is caused by a decrease in aggregate supply due to rising production costs, will not persist in the long run without an increase in the money supply. This is because in the absence of an increase in the money supply, businesses would eventually adjust their prices and wages to reflect the higher costs, leading to a return to the equilibrium level of output and prices. Thus, they believe that excessive money supply growth is a necessary condition for sustained cost-push inflation.

Monetarists and Rational Expectation Theorists Believe That Cost-Push Inflation as Impossible