"The dramatic reduction of the money supply during the 1930s was responsible for the Great Depression.The macroeconomy is intrinsically stable if left alone by the prying hand of government.The Federal Reserve Board, instead of tightening money during booms and loosening money during recessions (policies that are ineffective due to time lags), should simply increase the supply of money at a steady rate of 3 to 5 percent per year." This statement reflects which school of thought?
A)The traditional Keynesians
B)The monetarists
C)The traditional classicals
D)The new Keynesians
E)The new classicals

Question

Quizplus · Accepted Answer

The statement reflects the ideas of monetarists, who believe that changes in the money supply are the primary driver of macroeconomic fluctuations and advocate for a steady increase in the money supply to promote economic stability.

"The Dramatic Reduction of the Money Supply During the 1930s