A constant money growth rule
A)leads to higher inflation.
B)keeps interest rates stable.
C)prevents the demand for money from shifting.
D)does not work well because the demand for money is too volatile.
E)works better than an interest rate rule because the demand for money is too volatile.

Question

Quizplus · Accepted Answer

A constant money growth rule does not work well because the demand for money can be volatile. Changes in the demand for money, if not accommodated, can lead to fluctuations in interest rates and economic activity, making it challenging to maintain stable economic conditions with a constant money growth rule.

A Constant Money Growth Rule