To stabilize the economy, monetarists and rational expectations economists
A) would like a monetary rule to be adopted.
B) would like to see coordination failures eliminated.
C) recommend the use of discretionary ﬁscal policy.
D) recommend the use of discretionary monetary policy.

Question

Quizplus · Accepted Answer

Monetarists and rational expectations economists advocate for the adoption of a monetary rule, such as a fixed growth rate of the money supply or a target for inflation, in order to stabilize the economy. They believe that discretionary monetary policy is often counterproductive, as it can lead to credibility issues and expectations that undermine its effectiveness.

To Stabilize the Economy, Monetarists and Rational Expectations Economists