(Last Word) Market monetarists advocate that the Fed "target the forecast" (of the predicted nominal GDP growth rate), claiming primarily that it will
A) promote economic stability by ensuring that total spending will grow at a predictable rate each year.
B) prevent high rates of inﬂation.
C) keep the economy at its natural rate of unemployment.
D) prevent real GDP from growing too much.

Question

Quizplus · Accepted Answer

Market monetarists argue that targeting the forecast of nominal GDP growth is an effective way to promote economic stability, as it ensures that total spending grows at a predictable rate each year. This, in turn, can prevent fluctuations in output and employment that are associated with both recessions and booms. It is not primarily aimed at preventing high rates of inflation, keeping the economy at its natural rate of unemployment, or preventing real GDP from growing too much.

(Last Word) Market Monetarists Advocate That the Fed "Target the Forecast