Monetarists and Economic Instability

Monetarists and Economic Instability

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Question

According to monetarists, ________ is a primary source of economic instability:

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A. B. C. D.

B

Monetarists believe that monetary policy has a powerful influence on the economy but also realize that there are lengthy and unpredictable time lags between the implementation of a monetary policy and the realization of its primary effects. Hence, they reject the active use of discretionary monetary policy for controlling the economy, prescribing a steady growth in money supply to track the real growth rate.