The monetarist-Keynesian debate on the importance of monetary policy is unresolved because monetarists and Keynesians focus on two different types of evidence that generate conflicting conclusions. Monetarists tend to focus on
A)structural-model evidence,while Keynesians focus on reduced-form evidence.
B)reduced-form evidence,while Keynesians focus on structural-model evidence.
C)reduced-form evidence,while Keynesians focus on direct-model evidence.
D)structural-model evidence,while Keynesians focus on direct-model evidence.

Question

Quizplus · Accepted Answer

Monetarists tend to focus on reduced-form evidence, which involves empirical analysis focused on the relationship between the policy instrument (in this case, the money supply) and the economic outcome (such as inflation or output). Keynesians, on the other hand, tend to focus on structural-model evidence, which involves constructing theoretical models that incorporate a wide range of economic variables and relationships. These models are used to simulate the response of the economy to different shocks and policy interventions. These different approaches can lead to different conclusions about the effectiveness of monetary policy.

The Monetarist-Keynesian Debate on the Importance of Monetary Policy Is