Monetarists believe that:
A)short-run problems are not likely.
B)GDP fluctuations will be less pronounced if the Federal Reserve uses discretionary monetary policy.
C)price fluctuations are likely in the short or long run.
D)GDP will grow steadily if the money supply grows steadily.

Question

Quizplus · Accepted Answer

Monetarists believe that steady growth in the money supply will lead to steady GDP growth in the long run. They do acknowledge that price fluctuations may still occur, but they do not believe that short-run problems are as likely to occur as Keynesians do. Discretionary monetary policy may help alleviate GDP fluctuations in the short run, but monetarists would argue that a focus on a rules-based approach to monetary policy is more effective in achieving long-term stable growth.

Monetarists Believe That