Monetarists believe that a monetary policy rule will tend to lead to inﬂation.

Question

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Monetarists believe that a stable and predictable monetary policy rule can help to control inflation, by keeping the growth rate of the money supply in line with the growth rate of the economy. They argue that uncontrolled increases in the money supply can lead to inflation, but a well-designed policy rule can prevent this from happening. However, there may be other factors that can influence inflation, such as supply shocks or changes in expectations, which may require adjustments to the policy rule.

Monetarists Believe That a Monetary Policy Rule Will Tend to Lead