Which of the following are TRUE regarding Milton Friedman's k-percent money targeting rule?
i. Currently this policy is used by many policy makers.
ii. This rule sets the growth rate of the quantity of money independently of the economy's behavior.
iii. For this policy to work well, the velocity of circulation must be stable.
A) i only
B) ii only
C) ii and iii
D) i and ii
E) iii only

Question

Quizplus · Accepted Answer

Friedman's k-percent rule suggests a fixed growth rate of money supply, independent of economic conditions (ii). For it to be effective, the velocity of money must be stable (iii). However, it is not widely used today (i is false).

Which of the Following Are TRUE Regarding Milton Friedman's K-Percent