Which monetary policy rule needs a stable demand for money to work well?
A) discretionary monetary policy
B) monetary base instrument rule
C) k-percent rule
D) gold price targeting rule
E) inflation targeting rule

Question

Quizplus · Accepted Answer

The k-percent rule is a monetary policy rule that requires the central bank to increase the money supply by a fixed percentage each year, regardless of economic conditions. This rule works well only when there is a stable demand for money, as changes in the demand for money can create instability in the economy.

Which Monetary Policy Rule Needs a Stable Demand for Money