Monetarists argue that:
A) the impact lag for monetary policy is short and predictable.
B) stabilization policies may actually be destabilizing.
C) the Federal Reserve System should use active monetary policy.
D) active monetary policy should be used to reinforce active fiscal policy.

Question

Quizplus · Accepted Answer

Monetarists argue that stabilization policies, such as active monetary policy, may actually be destabilizing by creating unpredictable expectations and causing unintended consequences. They also argue for a focus on stable growth in the money supply as a means of promoting long-term economic stability. They do not necessarily advocate for the use of active monetary policy or reinforcement of fiscal policy. The impact lag for monetary policy is a debated issue among economists, with some arguing it is short and predictable while others argue it is longer and less predictable.

Monetarists Argue That