Question

Monetarism plays a role in economic growth by

Answer 1

The answer is D-influencing the supply of money.

Answer 2

The fourth alternative is correct (D).

Monetarist theory was founded by liberal economist Milton Friedman.

According to this theory, currency affects short-term production and long-term inflation. Basically, if the government injects excess currency into the economy, producers will have the perception that it has a lot of money in the economy and will increase its output. However, in the long run, the economy will be inflated, since too much currency in circulation is a direct cause of inflation. Thus, expectations will be thwarted by a monetary illusion.

In this way, the contribution of Friedman and other monetarists was to demonstrate that monetary policy should be treated with caution and focused on preventing inflation.

That is why the government can not simply print money and distribute it to the population.