Monetarists believe that
A)Monetary policy is effective only in a recession.
B)Interest rates are the critical policy lever.
C)The money supply should be expanded at a steady,predictable rate.
D)Government spending and taxes are the critical policy levers.

Question

Quizplus · Accepted Answer

Monetarists believe that the money supply should be expanded at a steady and predictable rate, and that this is the best way to stimulate economic growth and stability. They argue that fluctuations in the money supply are a major cause of inflation and economic instability, and that central banks should aim to keep the money supply growing in a controlled and systematic way. Monetarists do not believe that government spending and taxes have as much impact on the economy as the money supply, and they often see interest rates as a byproduct of changes in the money supply rather than a critical policy lever in and of themselves.

Monetarists Believe That