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Monetarists and rational expectations theorists differ in their views on which of the following? Multiple select question.

a. The appropriate long-run macro policies
b. How changes in the money supply affect the economy
c. The cause of the observed instability of the private economy
d. Assumptions about short-run price and wage stickiness

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Final answer:

Monetarists and rational expectations theorists have different views on long-run macro policies, how changes in the money supply affect the economy, and assumptions about short-run price and wage stickiness. The correct answer is option a., b. and d.

Step-by-step explanation:

Monetarists and rational expectations theorists differ in their views on multiple aspects of macroeconomics.

A. The appropriate long-run macro policies: Monetarists believe that monetary policy can be used to stabilize the economy and reduce inflation, while rational expectations theorists argue that monetary policy should not be used as a tool of stabilization policy.

B. How changes in the money supply affect the economy: Monetarists believe that changes in the money supply have a direct impact on the level of economic activity, while rational expectations theorists suggest that changes in the money supply may only affect the price level but not real GDP.

D. Assumptions about short-run price and wage stickiness: Monetarists often assume that prices and wages are sticky in the short run, while rational expectations theorists argue that economic adjustments, including price and wage adjustments, may happen very quickly.

Both schools of thought offer different perspectives on the cause of the observed instability of the private economy, with Monetarists attributing it to changes in the money supply and rational expectations theorists focusing on the ability of individuals to form accurate expectations about future economic conditions.

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