Friedman argued that a central bank could use monetary policy to peg which of the following?
A)the nominal exchange rate
B)real GDP growth rate
C)the unemployment rate
D)the interest rate

Question

Quizplus · Accepted Answer

Friedman argued that a central bank could use monetary policy to peg the nominal exchange rate. This is known as a fixed exchange rate system, where the central bank adjusts the money supply to maintain a specific exchange rate with another currency. This is in contrast to a floating exchange rate system, where the exchange rate is determined by market forces.

Friedman Argued That a Central Bank Could Use Monetary Policy