The recommended policy of the Neoclassical model is that government
should not intervene with monetary and fiscal policy.
Economics MCQ - Economics Section 2
Monetarists believe that policy effects typically occur long after the
need for which they were implemented. By the time the policy has an
impact the original issue might no longer be relevant.
According to the RBC theory, changes in output and unemployment
are caused by real economic variables and not by monetary variables
such as inflation.
The Austrian school shared some views with the Neoclassical school
but also addressed two additional areas: 1) role of government and 2)
money as a medium of exchange.
Monetarists are likely to raise the criticisms expressed in options A and
B.
