Monetarists Reject Using Discretionary Monetary Policy as an Effective Stabilization

question 73

Multiple Choice

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

• A) if the money supply grows at a rate equal to the economy's long-run rate of economic growth, then the economy will be unstable.
• B) that changes in the money stock do not affect output or prices.
• C) the Fed will miss its money supply targets and make the economy worse.
• D) monetary policy can stimulate aggregate demand, but it cannot affect inflation.

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Definitions:

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Economic Order Quantity principles involve calculating the optimal order size to minimize the costs related to ordering, receiving, and holding inventory.

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