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Economics (AS & A Level) · Oct / Nov 2022 · Paper 31 · Question 25

9708Money and banking

Which statement does not correctly characterise the Monetarist view of the way in which the economy operates?

  1. AInflation is always caused by increases in the money supply in the long run.
  2. BThe long-run aggregate supply curve is vertical in shape.
  3. CThe velocity of circulation of money is highly unstable.
  4. DWages are flexible both upwards and downwards.

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Correct answer: C. The velocity of circulation of money is highly unstable.

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