Monetarist theory differs from classical in A supposing the

Solution

Option B.

Supporting the neutrality of money in the long run.

In monetarist models, monetary policy is said to be neutral in Long run but not in short run.

In short run the rate of interest will be below the natural rate of interest and create an inflationary gap where the aggregate demand for output as a whole will exceed the maximum amount of out put that the Economy is producing.

This causes increase in the level of prices.

Therefore monetary policy maintains neutrality in the long run by keeping the interest rates and the prices at a lower level.