According to the Monetarist view, the impact of expansionary monetary policy will be:
A) the same in the long run as in the short run.
B) the same regardless of whether the effects of the policy are anticipated or unanticipated.
C) a higher price level (inflation).
D) a decrease in short-run prices and an increase in long-run prices.

Question

Quizplus · Accepted Answer

According to the Monetarist view, expansionary monetary policy will lead to an increase in the money supply, which in turn will lead to an increase in aggregate demand. This increase in demand will lead to a higher price level, resulting in inflation. Therefore, the impact of expansionary monetary policy will be a higher price level, or inflation, in the short run and the long run.

According to the Monetarist View, the Impact of Expansionary Monetary