Final answer:
Monetarists believe that when velocity is constant, changes in the money supply lead to proportional changes in nominal gdp. This can result in different combinations of inflation and real gdp growth. If velocity is unpredictable, the impact of money supply changes on nominal gdp is also uncertain.
"the correct option is approximately option B"
Step-by-step explanation:
Monetarists' views on how the money supply impacts the economy can be summarized through the quantity theory of money. They typically assert that a change in the money supply will have a direct effect on nominal gdp. This is encapsulated in the equation Money supply x velocity = Nominal GDP, where the velocity of money (V) is the rate at which money is exchanged in an economy.
If we consider velocity to be stable, an increase in the money supply results in a proportional rise in nominal GDP. This can manifest as inflation, an increase in real GDP, or both. However, if velocity changes in a predictable manner, the relationship holds, and monetary policy can be effective. But if the velocity is unpredictable, the outcomes of changes in the money supply also become uncertain, leading to challenges in forecasting and managing economic outcomes.
Among the options presented in the question, monetarists would most likely support the idea that a change in the money supply will change aggregate demand and therefore nominal GDP, aligning with the quantity theory of money and the classic monetarist viewpoint.