What monetary policy prescription do monetarists support?

ll examine each separately then tog Show more There is debate concerning both monetary and fiscal policy. Youll examine each separately then together. A. Below are two arguments against using fiscal policy. Explain each. I. Permanent income hypothesis. (3 points) II. Effects of a dollar of government spending versus a dollar of private spending. (3 points) B. The main argument against monetary policy is that it affects only nominal variables not real variables. Explain this argument using the two methods below. I. Explain and show on a graph the short-run and long-run equilibrium changes in the AD/AS model from expansionary monetary policy. How does this support an anti-monetary policy stance? (5 points) II. Explain the equation of exchange. What do quantity theorists believe and why dont they support monetary policy? (3 points) C. Some people will argue against using either monetary or fiscal policy instead supporting a laissez-faire approach to the economy. The well-known economist Milton Friedman for example believed in the permanent income hypothesis and was also a monetarist. What monetary policy prescription do monetarists support? (2 points) Show less


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