Which of the Following Are Reasons Why Monetarists Oppose Activist

question 1

Multiple Choice

Which of the following are reasons why monetarists oppose activist stabilization policies?
I. Monetary policy lags are so long and variable that trying to stabilize the economy using
Monetary policy can be destabilizing.
II. Monetary policy affects a nation's currency exchange rate and affects the nation's competitiveness in the global market.
III. Because of crowding-out effects, fiscal policy has no effect on GDP.
IV. Fiscal policies must be financed by government borrowing or tax increases, both of which affect aggregate demand negatively.

• A) I only
• B) I and II only
• C) I and III only
• D) I, II, III, and IV

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Definitions:

Min

Often short for "minimum," it represents the smallest or least possible amount or degree of a certain quantity or measure.

Numeraire Good

A benchmark or standard commodity against which the relative price of all other goods and services is measured in an economy.

Initial Endowment

The initial set of assets, goods, or resources that individuals or entities possess before entering into any economic transactions or exchanges.

Pareto Optimal Allocation

An economic state where resources are allocated in such a way that it is impossible to make any individual better off without making at least one individual worse off.