Which of the following schools of thought believe that expansionary monetary policy is effective in fighting recessions?
I. classical macroeconomics
II. Great Moderation consensus
A)I only
B)II only
C)I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

Classical macroeconomics believes in the neutrality of money and that monetary policy has limited effectiveness in influencing real variables such as output and employment. The Great Moderation consensus, which emerged in the 1990s, emphasized the importance of stable monetary policy and doubted the need for active countercyclical policy. However, both schools of thought do not believe that expansionary monetary policy is effective in fighting recessions, so the answer is B.

Which of the Following Schools of Thought Believe That Expansionary