Monetarists Reject Using Discretionary Monetary Policy as an Effective Stabilization

question 29

Multiple Choice

Monetarists reject using discretionary monetary policy as an effective stabilization tool because

• A) it would require the money supply to grow at a rate equal to the economy's long-run rate of economic growth.
• B) they do not believe that changes in the money stock affect output or prices.
• C) they believe that there are lengthy and variable time lags between when a change in monetary policy is instituted and when the change exerts its primary impact on output and prices.
• D) they believe monetary policy can stimulate aggregate demand, but it cannot control inflation.

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