In a recession,monetarists believe
A)Velocity varies in response to fiscal policy.
B)Interest rates rise to eliminate the recession.
C)Fiscal policy is ineffective.
D)Marginal tax rates will automatically decrease.

Question

Quizplus · Accepted Answer

Monetarists believe that fiscal policy is ineffective in dealing with a recession, as the effects of any government intervention will be offset by changes in the money supply and interest rates. They emphasize the role of the central bank in managing the money supply to stabilize the economy.

In a Recession,monetarists Believe