Monetarists argue that:
A) the Federal Reserve System should allow the money supply to increase at a slow, steady annual rate.
B) since the velocity of money is unstable, a fixed annual increase in the money supply will exacerbate inflation in the long run.
C) self-correction is less effective than activist monetary policy.
D) fiscal policy should always be used before monetary policy.

Question

Quizplus · Accepted Answer

Monetarists believe that inflation can be controlled by controlling the money supply. They argue that the Federal Reserve System should allow the money supply to increase at a slow, steady annual rate to prevent inflation.

Monetarists Argue That