The Argument Advanced by Economist Milton Friedman for Adopting a Monetary

question 271

Multiple Choice

The argument advanced by economist Milton Friedman for adopting a monetary growth rule is that

• A)active monetary policy potentially destabilizes the economy.
• B)central banks can control the money supply, but not the level of interest rates.
• C)a constant rate of growth in the money supply would eliminate the booms and recessions that make up the business cycle.
• D)the growth rate of M1+ has been unstable.
• E)active monetary policy is the only defense a modern economy has against recession.

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Definitions:

Supply

The total amount of a product or service that is available to consumers in the market.

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