Monetarists emphasize the fact that
A)the growth rate of money supply determines the inflation rate only in the short run
B)instability in the growth rate of money causes instability in economic activity
C)since monetary policy has powerful effects on the economy, it should be used actively to fine-tune the economy
D)in conducting monetary policy, setting interest rate targets is preferable to setting monetary targets
E)all of the above

Question

Quizplus · Accepted Answer

Monetarists believe that instability in the growth rate of money supply causes instability in economic activity, and they attribute inflation primarily to growth in the money supply in the long run. They also emphasize the importance of stable monetary policy, but they generally advocate for setting monetary targets rather than interest rate targets. They do not believe that monetary policy should be actively fine-tuned. Therefore, options A, C, D and E are incorrect.

Monetarists Emphasize the Fact That