Milton Friedman argued that the Fed's control over the money supply could be used to peg
A)the level or growth rate of a nominal variable, but not the level or growth rate of a real variable.
B)the level of a nominal or real variable, but not the growth rate of a real or nominal variable.
C)the level or growth rate of a real variable, but not the level or growth rate of a nominal variable.
D)both levels and growth rates of both real and nominal variables.

Question

Quizplus · Accepted Answer

Milton Friedman, a prominent monetarist, argued that the Federal Reserve (or any central bank) has control over nominal variables, such as the money supply, which can influence the level or growth rate of nominal variables like inflation or nominal GDP. However, he believed that central banks cannot directly control real variables (such as real GDP or the unemployment rate) in the long run, as these are determined by real factors like technology, resources, and labor productivity.

Milton Friedman Argued That the Fed's Control Over the Money