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:

Negative Reinforcement

A behavioral concept where the removal of an unfavorable event or outcome after the display of a behavior increases the likelihood of that behavior being repeated in the future.

Desirable Behaviour

Actions or reactions that are preferred in a particular context, often aligning with certain norms or goals.

Contingent Reinforcement

A behavioral strategy where the provision of rewards or punishments is directly linked to the occurrence or non-occurrence of a specific behavior.

Rewards

Benefits or recognition provided to individuals or groups for their performance and achievements.