(Last Word) Market monetarists believe the Fed should set up a prediction market for
A) the money supply.
B) nominal GDP.
C) real GDP.
D) the inﬂation rate.

Question

Quizplus · Accepted Answer

Market monetarists believe that nominal GDP targeting is the best policy framework for central banks, and setting up a prediction market for nominal GDP would allow the market to provide information on future economic conditions that could guide monetary policy decisions. Prediction markets have been shown to be effective at aggregating information and producing accurate predictions, making them a useful tool for central banks. The other choices (money supply, real GDP, and inflation rate) are less direct indicators of overall economic activity and may not be as useful for guiding monetary policy.

(Last Word) Market Monetarists Believe the Fed Should Set Up