Monetarists argue that the relationship between:
A) The quantity of money the public wants to hold and the level of GDP is not stable
B) The quantity of money the public wants to hold and the level of GDP is stable
C) The quantity of money the public wants to hold and the level of saving is stable
D) Velocity and the interest rate varies directly

Question

Quizplus · Accepted Answer

Monetarists argue that the quantity of money people want to hold is stable in the long run and that changes in the money supply have a proportionate effect on nominal GDP. This is known as the quantity theory of money, which states that the price level is determined by the money supply and the velocity of money. Therefore, according to monetarists, there is a stable relationship between the quantity of money people want to hold and the level of GDP.

Monetarists Argue That the Relationship Between