To stabilize the economy, monetarists and rational-expectations economists:
A) Would like a monetary rule to be adopted
B) Would like to see coordination failures eliminated
C) Recommend the use of discretionary fiscal policy
D) Recommend the use of discretionary monetary policy

Question

Quizplus · Accepted Answer

Monetarists and rational-expectations economists believe that a monetary rule, such as targeting a specific money supply or inflation rate, would help stabilize the economy. They do not recommend discretionary fiscal policy, which involves government intervention in the economy through changes in taxes or spending, as they believe it is unpredictable and can lead to unintended consequences. Similarly, they do not recommend discretionary monetary policy, as they believe it can also lead to uncertainty and is not effective in stabilizing the economy.

To Stabilize the Economy, Monetarists and Rational-Expectations Economists