Nobel Prize-Winner Milton Friedman Advocated Which of the Following as an Adequate

question 110

Multiple Choice

Nobel Prize-winner Milton Friedman advocated which of the following as an adequate monetary policy?

• A) a discretionary rule in which the money supply should be adjusted to control the level of inflation rate
• B) a discretionary rule in which the money supply should be adjusted to counteract aggregate demand shocks
• C) a strict rule in which the money supply should grow 2% higher than the long-run economic growth rate
• D) a strict rule in which the money supply should grow at the rate of the long-run economic growth rate

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Definitions:

Inelastic

Describing a situation where the demand for a good or service is relatively unaffected by changes in its price.

Essential Consumption

The purchase and use of goods and services that are considered necessary for basic living and well-being.

Marginal Utility

The additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.

Total Utility

The total satisfaction received from consuming a particular quantity of goods or services.