Friedman argued that a central bank could use monetary policy to peg which of the following?
A) the nominal exchange rate
B) the real GDP growth rate
C) the unemployment rate
D) the interest rate

Question

Quizplus · Accepted Answer

Friedman argued that a central bank could use monetary policy to peg the nominal exchange rate by buying or selling foreign currency reserves. He believed that a fixed or floating exchange rate system could work effectively as long as the central bank was committed to maintaining the fixed rate or allowing market forces to determine the floating rate.

Friedman Argued That a Central Bank Could Use Monetary Policy