According to monetarists, the key determinant of expansions and recessions is
A) the rate of change in interest rates.
B) the ineptitude of politicians to enact appropriate fiscal policies.
C) the rate of growth of the quantity of money.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

Monetarists believe that the rate of growth of the quantity of money is the key determinant of expansions and recessions. They argue that changes in money supply directly affect aggregate demand, and therefore influence economic activity. The other options may also influence economic activity, but monetarists place the most emphasis on changes in the money supply.

According to Monetarists, the Key Determinant of Expansions and Recessions