Monetarists Say

question 186

Multiple Choice

Monetarists say

• A) that, because P is stable, a change in M will change Q proportionately in the opposite direction.
• B) a change in the money supply will change aggregate demand and therefore nominal GDP.
• C) a change in the money supply will change velocity, which in turn will change nominal GDP.
• D) a change in the money supply will change the interest rate, which will change investment spending and nominal GDP.

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Definitions:

Weekly Interest Rate

The amount of interest charged or earned over a week, often used to describe the rate for loans or savings accounts on a weekly basis.

Disbursements

Payments made by a business in cash or cash equivalents, often pertaining to operating expenses.

Holding Cash

The practice of keeping a portion of assets in liquid cash form as a safeguard against uncertainty or to meet short-term obligations.