Which of the Following Statements Would Milton Friedman Agree with Concerning

question 36

Multiple Choice

Which of the following statements would Milton Friedman agree with concerning the conduct of monetary policy?

• A)Information lags are short, enabling the central bank to respond quickly to changes in the economy.
• B)There is little uncertainty over the effect of a change in the money supply on the economy.
• C)There are long and variable lags between monetary policy actions and their economic results.
• D)Wage and price adjustments are relatively slow, so changing the money supply will have a minimal impact on the real economy.

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Definitions:

Wage

Compensation in the form of financial payment received by an employee from an employer in exchange for work performed.

Price Controls

Government regulations establishing maximum or minimum prices to be charged for specified goods and services, often intended to manage inflation or protect consumers.

Centrally Planned Economy

A type of economic system where decisions about production, investment, prices, and incomes are determined centrally by a government.

Capitalist Economy

A system of economy where the ownership of capital resources is in the hands of private individuals or companies, decisions regarding investments are privately made, and the determination of prices, output, and distribution of products is largely governed by the dynamics of competition in a free-market environment.