The Fed will increase the money supply by a set percentage every year at a level consistent with long-term price stability and economic growth if it is following:

Question

Quizplus · Accepted Answer

Friedman's monetary rule states that the money supply should be increased at a fixed percentage every year to achieve long-term price stability and economic growth. This is consistent with the statement given in the question. Inflation targeting procedures focus on achieving a target rate of inflation rather than a fixed percentage of money supply growth. Monetary targeting procedures involve targeting a specific level of the money supply, which may not be consistent with long-term price stability and economic growth. The Taylor rule suggests adjusting interest rates based on the current inflation rate and output gap, and does not involve a fixed percentage increase in the money supply.

The Fed Will Increase the Money Supply by a Set