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Monetarists and the Economy Monetarists believe there's a direct link between the money supply and prices, real GDP, and employment. If the money supply is
Monetarists and the Economy
Monetarists believe there's a direct link between the money supply and prices, real GDP, and employment. If the money supply is allowed to grow at a predictable rate, the economy will stay in balance. In effect, they feel that in the long-run, the economy will be stable at full employment if the velocity of money is predictable.
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- The Monetarists could have ended the Great Depression and brought the economy back to full employment.
- The Depression never would have happened if the Monetarists had been in charge.
- Would a Monetarist be more likely to favor fiscal, monetary, or neither policy? Why?
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