The monetary policy rule suggests that:
A) we should follow the rules set by the central bank.
B) the central bank should follow the rules set by the federal government.
C) the interest rate should grow at a slow and steady pace.
D) the money supply should grow at a slow and steady pace.

Question

Quizplus · Accepted Answer

The monetary policy rule suggests that the central bank should adjust the growth rate of the money supply in order to achieve economic stability and low inflation. This typically involves a slow and steady increase in the money supply over time, which can help to encourage investment and economic growth. The interest rate may also be adjusted as part of this process, but the primary focus is on controlling the money supply. Therefore, choice D is the best answer.

The Monetary Policy Rule Suggests That