Milton Friedman recommended a monetary policy rule by which the
A) interest rate increases 3 percent each year.
B) unemployment rate increases 3 percent each year.
C) money supply increases 3 percent each year.
D) government deficit increases 3 percent each year.

Question

Quizplus · Accepted Answer

Milton Friedman recommended a monetary policy rule by which the money supply increases 3 percent each year. This is known as the "k-percent rule" where the central bank increases the money supply by a fixed percentage each year to keep inflation low and stable. Friedman believed that this rule could be easily communicated and understood, and would help to anchor inflation expectations.

Milton Friedman Recommended a Monetary Policy Rule by Which the