Which Statement BEST Explains Why the Central Bank Flirted with Monetarism

question 219

Multiple Choice

Which statement BEST explains why the central bank flirted with monetarism but then gave up?

• A) The natural rate hypothesis failed to predict a worsening of the trade-off between inflation and unemployment.
• B) A sharp rise in inflation during the 1970s broke the perceived trade-off between inflation and unemployment and discredited traditional Keynesianism.
• C) Inflation started dropping off sharply in the 1980s,and this helped bolster the view that targeting the money supply no longer made sense.
• D) It finally became evident that there was no longer a trade-off between inflation and unemployment.

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