According to monetarists, a fiscal deficit will be associated with an increase in real output
A)regardless of the character of accompanying changes in M or V.
B)only if it is accompanied by an increase in the demand for money.
C)only if it is accompanied by an increase in the supply of money.
D)only if it is financed by selling government bonds to the public.

Question

Quizplus · Accepted Answer

Monetarists believe that fiscal deficits will lead to an increase in real output only if they are accompanied by an increase in the money supply, as they emphasize the role of money supply in influencing economic activity.

According to Monetarists, a Fiscal Deficit Will Be Associated with an Increase