Mainstream economics views monetary policy as a
A) source of instability, similar to the view of monetarism.
B) stabilizing factor, similar to the view of monetarism.
C) source of instability, while monetarism views it as a stabilizing factor.
D) stabilizing factor, while monetarism views it as a source of instability.

Question

Quizplus · Accepted Answer

Mainstream economics generally views monetary policy as a stabilizing factor, as it can be used to influence economic activity and promote stability. Monetarism, on the other hand, views monetary policy as a potential source of instability, as it can create inflationary pressures if the money supply is not carefully managed. Therefore, the best choice is D, as it accurately reflects the diverging views between mainstream economics and monetarism on the role and impact of monetary policy.

Mainstream Economics Views Monetary Policy as a