If the Fed follows a monetary rule, it will increase the money supply at a rate of growth equal to the rate of inflation.

Question

Quizplus · Accepted Answer

A monetary rule typically involves adjusting the money supply based on specific economic indicators, but it does not necessarily mean increasing the money supply at a rate equal to the rate of inflation. The rule could be based on other factors such as targeting a specific inflation rate or economic growth rate.

If the Fed Follows a Monetary Rule, It Will Increase