The Friedman rule suggests that
A)the optimal nominal interest rate in an economy should be negative.
B)the optimal nominal interest rate in an economy should be positive.
C)the optimal nominal inflation rate in an economy should be positive.
D)the optimal nominal inflation rate in an economy should be negative.

Question

Quizplus · Accepted Answer

The Friedman rule suggests that the optimal nominal interest rate should be zero, which implies that the nominal inflation rate should be negative, equal to the real interest rate, to minimize the opportunity cost of holding money.

The Friedman Rule Suggests That