For the Fed to Use Money Growth as a Direct

question 32

Multiple Choice

For the Fed to use money growth as a direct monetary policy target, which of the following needs to exist?

• A) A highly variable deposit expansion multiplier
• B) A stable link between the monetary base and the quantity of money
• C) A predictable link between the quantity of money and the deposit expansion multiplier
• D) A stable link between the monetary base and the quantity of money and a predictable relationship between the quantity of money and the rate of inflation

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