Economist Milton Friedman Called for a Policy Rule That Keeps

question 163

Multiple Choice

Economist Milton Friedman called for a policy rule that keeps the growth rate of the money supply at 3% because:

• A) real shocks on average are 3% of real GDP.
• B) spending shocks on average are 3% of real GDP.
• C) the economy's long-run potential growth rate is 3%.
• D) the money supply has grown on average at 3% historically.

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Definitions:

Perfectly Competitive Firms

Firms that operate in a market where no single buyer or seller has the power to influence the price of the product, and where the product offered is homogeneous, with many sellers and buyers.

AVC

Average Variable Cost; the total variable costs (costs that change with the level of output) divided by the quantity of output produced.

Minimize Losses

A strategy or approach aimed at reducing the amount of money or resources that are being lost or wasted.

Perfectly Competitive Firms

Perfectly Competitive Firms operate in a market where numerous buyers and sellers exchange homogeneous products, with no single entity able to influence the market price.