Use the following to answer questions:
-Friedman favoured:
A) activist monetary policy to stabilize the economy.
B) activist fiscal policy coupled with a neutral monetary policy.
C) a monetary policy rule.
D) interest rate targeting.

Question

Use the following to answer questions: 
-Friedman favoured:
A) activist monetary policy to stabilize the economy. 
B) activist fiscal policy coupled with a neutral monetary policy. 
C) a monetary policy rule. 
D) interest rate targeting.

Quizplus · Accepted Answer

Friedman believed that a monetary policy rule, which sets the growth rate of the money supply at a fixed rate, would be the best way to stabilize the economy. This would provide a stable framework for market expectations, leading to steady economic growth and price stability. He opposed activist fiscal policies, arguing that they would lead to inflation and distortions in the economy. He also criticized interest rate targeting as an unreliable tool for stabilizing the economy.

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