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.

Question

Quizplus · Accepted Answer

Monetarists believe that the key to macroeconomic stability is maintaining a steady, predictable growth rate of the money supply. They argue that changes in interest rates have a limited effect on aggregate demand and inflation in the long run, and that central banks should focus on controlling the money supply to stabilize the economy. They also believe that monetary policy can be effective in both the short and long run, not just during recessions.

Monetarists Believe That