Multiple Choice
Which of the following are reasons why monetarists oppose activist stabilization policies?
I. Monetary policy lags are so long and variable that trying to stabilize the economy using
Jmonetary policy can be destabilizing.
II. Monetary policy affects a nation's currency exchange rate and affects the nation's competitiveness in the global market.
III. Because of crowding-out effects, fiscal policy has no effect on GDP.
IV. Fiscal policies must be financed by government borrowing or tax increases, both of which affect aggregate demand negatively.
A) I only
B) I and II only
C) I and III only
D) I, II, III, and IV
Correct Answer:
Verified
Correct Answer:
Verified
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