New classical economists attribute the link between the money supply and output to
A)reverse causation.
B)sticky prices.
C)the difficulty the Fed has in adjusting the Fed funds rate.
D)imperfect information.

Question

Quizplus · Accepted Answer

New classical economists believe that the link between the money supply and output is primarily due to imperfect information. They argue that changes in the money supply can temporarily affect real output because people cannot immediately distinguish between changes in nominal prices and changes in real prices.

New Classical Economists Attribute the Link Between the Money Supply