For the Fed to use money growth as a direct monetary policy target, which of the following needs to exist?

Question

Quizplus · Accepted Answer

For the Fed to effectively use money growth as a direct monetary policy target, it is crucial to have a stable link between the monetary base and the quantity of money, ensuring that changes in the monetary base lead to predictable changes in the money supply. Additionally, a predictable relationship between the quantity of money and the rate of inflation is necessary to ensure that adjustments in the money supply can effectively influence inflation rates, achieving the desired economic outcomes.

For the Fed to Use Money Growth as a Direct