The k-percent rule, an example of a money targeting rule, relies on a relatively stable
A) demand for money.
B) price of gold.
C) supply of money.
D) federal funds rate.
E) real interest rate.

Question

Quizplus · Accepted Answer

The k-percent rule is based on the idea that the demand for money is relatively stable in the short run. The rule suggests that the central bank should increase the money supply by a fixed percentage (k) each year to keep up with the increase in demand for money due to economic growth.

The K-Percent Rule, an Example of a Money Targeting Rule