Under the monetary growth rule proposed by the monetarists,the money supply would grow each year at a constant rate equal to the long-run rate of growth of
A)inflation.
B)real GDP.
C)interest rates.
D)employment.

Question

Quizplus · Accepted Answer

According to the monetary growth rule proposed by monetarists, the money supply should grow at a constant rate equal to the long-run rate of growth of real GDP. This is because they believe that inflation is primarily caused by increases in the money supply, and if the money supply grows at a rate equal to the growth of real GDP, then there will be price stability in the economy. Therefore, the answer is B.

Under the Monetary Growth Rule Proposed by the Monetarists,the Money