Monetarists conclude that the primary determinant of changes in nominal GDP is
A) money growth.
B) growth in aggregate demand.
C) growth in aggregate supply.
D) the inflation rate.

Question

Quizplus · Accepted Answer

Monetarists believe that changes in nominal GDP mainly depend on changes in the money supply. This is known as the Quantity Theory of Money, which states that the level of output and prices in an economy are directly proportional to the amount of money in circulation. Thus, an increase in money supply leads to an increase in nominal GDP, all other things being equal.

Monetarists Conclude That the Primary Determinant of Changes in Nominal