A policy in which the money supply is kept growing at a constant rate regardless of the state of the economy is
A)a Taylor rule.
B)a discretionary policy.
C)a policy rule advocated by monetarists.
D)advocated by activists.

Question

Quizplus · Accepted Answer

This policy is a policy rule advocated by monetarists, who believe that the money supply should grow at a constant rate based on the growth rate of the economy to maintain price stability. This approach is in contrast to a discretionary policy, where policy decisions are made based on the current state of the economy, and a Taylor rule, which adjusts interest rates based on the gap between actual and desired inflation and output. This policy is not advocated by activists, who tend to favor more interventionist policies.

A Policy in Which the Money Supply Is Kept Growing