Monetarism Quiz Zack and Sam

What is the primary determinant of economic growth according to monetarism?

• Tax rates

• Consumer confidence

• Money supply

• Government spending

Who is closely associated with the theory of monetarism?

• David Ricardo

• Milton Friedman

• Adam Smith

• John Maynard Keynes

What does the quantity theory of money state?

• Money supply multiplied by the rate at which money is spent equals nominal expenditures

• Consumer confidence is the key to economic stability

• Government spending determines economic growth

• Tax rates are the primary driver of economic growth

What is the formula for the quantity theory of money?

• M + V = P + Q

• M / V = P / Q

• M - V = P - Q

• M * V = P * Q

What does 'M' represent in the quantity theory of money?

• Price level

• Velocity

• Quantity of goods and services

• Money supply

What does 'V' represent in the quantity theory of money?

• Money supply

• Velocity

• Price level

• Quantity of goods and services

What does 'P' represent in the quantity theory of money?

• Money supply

• Velocity

• Price level

• Quantity of goods and services

What does 'Q' represent in the quantity theory of money?

• Quantity of goods and services

• Price level

• Velocity

• Money supply

What is the K-percent rule proposed by Milton Friedman?

• Consumer confidence should be maintained at a steady level

• Money supply should grow at a constant annual rate tied to the growth of nominal GDP

• Government spending should increase by a fixed percentage each year

• Tax rates should be adjusted based on inflation

What is the primary tool used in monetarism to control the money supply?

• Trade policy

• Tax policy

• Monetary policy

• Fiscal policy