Monetarists and rational expectations theorists generally agree that:
A) the Federal Reserve should adhere to a monetary rule.
B) the rate of interest and the price of bonds are positively or directly related.
C) the money supply cannot be measured and therefore cannot be controlled by the Federal Reserve.
D) prices and wages are inflexible downward.

Question

Quizplus · Accepted Answer

Monetarists and rational expectations theorists both believe that the Federal Reserve should adhere to a rule-based approach to monetary policy. This means using a specific formula or rule to adjust the money supply and interest rates. This approach helps to reduce uncertainty and promotes stability in the economy.

Monetarists and Rational Expectations Theorists Generally Agree That