4. Monetarists believe that there is a direct link between the money market and other basic aggregated markets. Thus, an increase in the supply of money will create an excess supply of money balances. People will attempt to reduce their money balances by spending the excess supply of money in several markets, including the market for goods and services. The increase in the supply of money will therefore lead directly to an increase in aggregate demand. By parallel reasoning, a reduction in the supply of money will lead to a fall in aggregate demand.