The Federal Reserve will increase the money supply by a set percentage every year at a level consistent with long-term price stability and economic growth if it is following

Question

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Friedman's monetary rule proposes that the central bank should increase the money supply by a fixed percentage every year to ensure long-term price stability and economic growth. This approach is based on the assumption that excessive increases in the money supply lead to inflation, while inadequate increases lead to economic stagnation. The other options listed (inflation targeting, monetary targeting, and the Taylor rule) focus on achieving specific short-term economic targets (such as inflation or output growth) rather than a fixed percentage increase in the money supply.

The Federal Reserve Will Increase the Money Supply by a Set