What, according to the monetarist theory of the business cycle, leads to changes in real GDP?
A) an unanticipated change in aggregate demand
B) a change in the growth rate of the quantity of money
C) a change in the growth rate in tax revenue
D) a change in profit expectations

Question

Quizplus · Accepted Answer

According to monetarist theory, changes in real GDP are primarily caused by changes in the growth rate of the quantity of money. This is because changes in the money supply affect the level of aggregate demand, which in turn affects output and employment levels. Monetarists argue that the government should pursue a stable growth rate of the money supply in order to promote long-term economic stability.

What, According to the Monetarist Theory of the Business Cycle