CLEP Social Sciences

Answer - B - Monetarism is the economic theory that assumes that inflation occurs when too much money is chasing too few goods.

Key Takeaway: Monetarism assumes that inflation occurs when too much money is chasing after too few goods. This economic philosophy proposes that the correct course of governmental action in this scenario is to steadily and predictably increase the money supply at a rate equal to the growth in the economy’s productivity.