Question

According to monetarists, to prevent recessions, the Federal Reserve should

Answer 1

Explanation:

According to monetarists, to prevent recessions, the Federal Reserve should. A) increase taxation. B) decrease the money supply.

Answer 2

According to the monetarists, avoid recessions the Federal Reserve should reduce the money supply.

Explanation:

• The reduction in the money supply is accompanied by an equivalent decline in nominal production, better known as GDP. Furthermore, the fall in the money supply would contribute to a drop in consumer expenditure. Such a decline would move the curve of aggregate demand to the west.
• Through rising or taxation, the policy is influencing the number of net profits (after-tax profits) of families. A tax rise would reduce discretionary income, as families take revenue. A tax cut would increase the discretionary wealth because it gives more resources to families.

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