Sia
Question
Statistics
Posted 7 months ago
What is the primary cause of deflation according to monetarist theory?
Choose 1 answer:
A A rapidly changing velocity of money
(B) The money supply decreases faster than real output decreases.
(c) A stable quantity velocity of money
D The money supply increases too rapidly for a long time.
(E) Any decrease in the money supply.
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Answer from Sia
Posted 7 months ago
Solution by Steps
step 1
According to monetarist theory, deflation occurs when the money supply decreases faster than the real output decreases
step 2
The correct answer choice is the one that states the money supply decreases faster than real output decreases
Answer
B
Key Concept
Monetarist Theory on Deflation
Explanation
Monetarist theory posits that deflation is primarily caused by a decrease in the money supply that outpaces the decrease in real output.
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