(Last Word) So-called market monetarists suggest that the Fed, based on economic performance data over the past many decades, should aim for which of the following targets?
A) a 5 percent per year growth in nominal GDP
B) a 5 percent per year inﬂation rate
C) a 5 percent unemployment rate
D) a 5 percent per year expansion of real GDP

Question

Quizplus · Accepted Answer

Market monetarists suggest that the Fed should aim for a 5 percent per year growth in nominal GDP. This is because they believe that monetary policy should target nominal GDP rather than inflation or unemployment, as it reflects both the level of economic activity and the prices at which goods and services are being traded in the economy. In addition, they argue that a stable growth rate in nominal GDP would lead to more stable inflation and lower unemployment over the long term.

(Last Word) So-Called Market Monetarists Suggest That the Fed, Based