Monetarists believe that:
A)the government should follow a fixed rule to change money supply in response to business cycles.
B)the government should not use discretionary monetary policy to achieve its goals of economic growth and low inflation.
C)government intervention should be well thought out and should be used only during recessions.
D)government intervention in the economy makes business cycles disappear.
E)government intervention policies have only long-run effects.

Question

Quizplus · Accepted Answer

Monetarists believe that the government should not use discretionary monetary policy because they believe that the primary cause of inflation and recessions is fluctuations in the money supply, and that the best way to stabilize the economy is to adhere to a rule-based monetary policy that maintains a stable growth rate of the money supply.

Monetarists Believe That