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.

Determine the optimal consumption bundle and its placement relative to the budget constraint.

Apply utility theory to specific examples involving the allocation of a fixed budget across different goods.

Discern the role of utility in making optimal consumption decisions under budget constraints.

Understand the theory and application of exposure therapy.

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Definitions:

Expectancy Theory

A psychological theory stating that an individual's motivation to engage in an activity is influenced by the expected outcome and the value of that outcome to the individual.

Expectancy

In psychology, a theory that explains the motivation behind choices, suggesting that people are motivated to act in a certain way because they expect their actions will lead to their desired goal.

Instrumentality

In expectancy theory, the belief that a certain level of performance will lead to a specific outcome or reward.

Effort

The amount of energy, work, or concentration applied towards a task or goal.