Many economists believe that
A)most short-term stabilization of the economy should be done through monetary policy
B)fiscal policy has no short-run effect on either output or inflation
C)monetary policy affects inflation but not output, even in the short run
D)monetary policy can effectively increase GDP with little or no effect on inflation
E)none of the above is true

Question

Quizplus · Accepted Answer

Many economists believe that monetary policy, which involves the manipulation of interest rates and the money supply by the central bank, is a more effective tool for short-term stabilization of the economy. This is because it can be implemented quickly and can affect the economy more directly. Fiscal policy, which involves government spending and taxation, may take longer to implement and its effects may be more indirect. Therefore, choice A is the best option.

Many Economists Believe That