Which monetarist idea has been absorbed into mainstream macroeconomics?
A) The net export effect has a stronger effect on fiscal policy than monetary policy
B) Cuts in tax rates significantly increase the productive capacity of the economy over the historical averages
C) Excessive growth in the money supply over long periods leads to inflation
D) The Federal funds rate is a more important monetary target than the money supply

Question

Quizplus · Accepted Answer

The idea that excessive growth in the money supply over long periods leads to inflation has been absorbed into mainstream macroeconomics and is now widely accepted by economists across the spectrum. This is often referred to as the quantity theory of money, which was a cornerstone of monetarist thinking. The other options may have some elements of truth or relevance, but they are not as universally accepted or mainstream as the idea of the money supply and inflation.

Which Monetarist Idea Has Been Absorbed into Mainstream Macroeconomics