Milton Friedman's argument was that the central bank should follow a monetary policy rule so that the money supply would:
A) grow at a slow and steady rate.
B) remain constant.
C) grow proportionally with the price level.
D) grow at the same rate as the GDP growth rate.

Question

Quizplus · Accepted Answer

Milton Friedman advocated for a monetary policy rule that would have the central bank increase the money supply at a steady rate that keeps pace with the growth rate of the economy, but not so much as to create inflation. A slow and steady rate of growth in the money supply, according to Friedman, would lead to price stability and economic growth.

Milton Friedman's Argument Was That the Central Bank Should Follow