The monetary policy most likely to be favored by monetarists is
A) a constant (nongrowing)money supply.
B) frequent discretionary changes in the money growth rate.
C) a constant and slow rate of monetary growth.
D) vigorous monetary expansion during recessions.
E) a steadily increasing rate of monetary growth.

Question

Quizplus · Accepted Answer

Monetarists believe that the greatest benefit of monetary policy is achieved when the growth rate of the money supply is kept constant over time, with a slow and predictable rate of monetary growth. This avoids excessive inflation or deflation and provides a stable economic environment for businesses to make long-term investment decisions. Choosing A or E would be considered too extreme and potentially lead to instability in the economy, while B would involve frequent discretionary changes which go against monetarist principles. D would also be considered too extreme as it could lead to inflationary pressures in the long run.

The Monetary Policy Most Likely to Be Favored by Monetarists