Question

How should government policymakers respond to the business cycles? (Hint: “The Federal Reserve’s job is to take away the punch bowl just as the party gets going” says William Mc Chesney Martin. On the other hand Milton Friedman says “What we need is not a skilled monetary driver of the economic vehicle continuously turning the steering wheel to adjust to the unexpected irregularities of the route, but some means of keeping the monetary passenger who is in the back seat as ballast from occasionally leaning over and giving the steering wheel a jerk that threatens to send the car off the road.

Answer 1