An example of Friedman's k-percent rule is
A) "every time GDP decreases, decrease the growth rate of the quantity of money."
B) "set the growth rate of the quantity money equal to the unemployment rate."
C) "every time GDP decreases, increase the growth rate of the quantity of money."
D) "do not change the growth rate of the quantity of money."
E) "use all information available to determine the growth rate of the quantity of money each time GDP changes."

Question

Quizplus · Accepted Answer

Friedman's k-percent rule suggests that a fixed annual growth rate of the money supply should be maintained, regardless of economic conditions. This fixed rate of growth is typically set at a low percentage, such as 1-3%, to promote price stability over the long-term. Option D ("do not change the growth rate of the quantity of money") aligns with Friedman's k-percent rule.

An Example of Friedman's K-Percent Rule Is