From a monetarist perspective, instability in the macro economy arises from:
A) Secular trends in the economy
B) The instability of velocity as a policy tool
C) Discretionary changes in monetary policy
D) The use of a monetary rule for monetary policy

Question

Quizplus · Accepted Answer

Monetarists believe that discretionary changes in monetary policy, such as those made by central banks in response to short-term economic conditions, lead to instability in the macro economy. Monetarists advocate for a rules-based approach to monetary policy, which keeps the money supply in line with long-term trends in the economy, to avoid such instability. Therefore, the answer is C.

From a Monetarist Perspective, Instability in the Macro Economy Arises