Asked by Enrique Cuevas on May 14, 2024
Verified
Most modern monetarists believe that
A) the capitalist system is inherently unstable and unpredictable.
B) structural economic changes are major causes of business cycles.
C) inflation is explained by too rapid a rate of growth of the nominal money supply,resulting in "too much money chasing too few goods."
D) deflations are caused by contagious pessimism among investors.
Modern Monetarists
Economists who follow the monetarist school of thought, focusing on the role of governments in controlling the amount of money in circulation.
Nominal Money Supply
The amount of money circulating in an economy without adjusting for inflation.
Inflation
The rate at which the general level of prices for goods and services is rising, and, consequently, the purchasing power of currency is falling.
- Present the monetarist perspective concerning the administration of the money supply and its repercussions on inflation and economic growth.
Verified Answer
AS
Anthony SanchezMay 19, 2024
Final Answer :
C
Explanation :
Most modern monetarists believe in the Quantity Theory of Money, which states that inflation is caused by an excessive growth in the money supply. Specifically, they believe that when the money supply grows at a faster rate than the economy, it leads to inflation because there is "too much money chasing too few goods".
Learning Objectives
- Present the monetarist perspective concerning the administration of the money supply and its repercussions on inflation and economic growth.