According to Milton Friedman,if the economy's long-run growth rate is 3%,then the Fed should set the annual money growth rate at:
A) 3%.
B) less than 3%.
C) more than 3%.
D) 3% plus or minus an amount to compensate for any shocks.

Question

Quizplus · Accepted Answer

Milton Friedman advocated for a monetary policy rule where the central bank should aim for a constant money growth rate equal to the long-run growth rate of the economy to maintain price stability. If the economy's long-run growth rate is 3%, Friedman would suggest setting the annual money growth rate at 3%.

According to Milton Friedman,if the Economy's Long-Run Growth Rate Is