Monetarists argue that active discretionary monetary policy will:
A) reduce economic fluctuations.
B) increase economic fluctuations.
C) have no information lag.
D) be effective immediately.

Question

Quizplus · Accepted Answer

Monetarists argue that active discretionary monetary policy, such as adjusting interest rates or the money supply, can be destabilizing and increase economic fluctuations. This is because of the difficulty in accurately predicting the effects of such policies, as well as the potential for delays in their implementation or transmission through the economy. Monetarists instead advocate for a more rule-based approach to monetary policy, such as targeting a specific growth rate of the money supply.

Monetarists Argue That Active Discretionary Monetary Policy Will