Question

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

Answer 1

C) increase the money supply

Monetarism sees careful control of the money supply as the key to maintaining a stable economy. The ideas of monetarism were first put forth by economist Milton Friedman, who believed that those in charge of the money supply in a society should focus on maintaining price stability. Having too much cash in circulation stimulates inflation. However, in regard to your particular question, during a recession prices stagnate or decrease and interest rates are forced to drop as well. Monetarists would see an increase in the money supply as a way to turn prices back upward during a recession.

Answer 2

Answer:

C. Increase in money supply

Explanation:

The economists who hold the strong belief that the changes in money supply is the only factor that determine the economy's performance are called monetarists.  According to theme the health of an economy can be controlled by adjusting the money supply, they believe that the inflation can be controlled in this manner. Milton Friedman is the most famous monetarists, he wrote the book "A Monetary History of The United States, 1867-1960"  and argued in the favour of monetarism to combat the impacts of inflation.